Portions of the financial statements for Parnell Company are provided below. Por
ID: 2583818 • Letter: P
Question
Portions of the financial statements for Parnell Company are provided below.
Portions of the financial statements for Parnell Company are provided below.
Portions of the fnancial statements for Parnel Company are provided below. PARNELL COMPANY Income Statement For the Year Ended December 31, 2016 (S in 000s) Revenues and gains 3890 Gain on sale of buildings 11 5 901 Expenses and loss 3345 120 53 132 59 Cost of goods sold Interest expense Loss on sale of machinery 13 731 Income before tax 170 85 Income tax expense Net income S 85 PARNELL COMPANY Selected Accounts from Comparative Balance Sheets December 31, 2016 and 2015 S in COOs) 2016 2015 Change 501 207 312 443 131) 108 108 84 01 218 Cash Accounts receivable $81 135 $152 Prepaid insurance Accounts payable Salaries payable Deferred income tax lability 342 57 120 181 120 35 Bond discount the cash Sows from operating activities section of the stabement of cash flows for Parnel Company using the direct method. (Enter your answers in thousands (ie, 5,000 should be entered as 5). Amounts to be deducted should be indicated with a minus sign.) Cash Flows from Operating Activities Net cash flows from operating activities 2. Prepare the cash ows from operating activities section of the statement of cash flows for Parnel Company using the indirect method. (Enter your answers in thousands (ie, 5,000 should be entered as 5). Amounts to be deducted should be indicated with a minus sign.) Cash Flows from Operating Activities: Adjustments for noncash effects Changes in operating assets and liabilties Net cash fows from aperating activitiesExplanation / Answer
1 Cashflow from operating activities under direct method: Receipts from customers (Note:1) 755 Payment to suppliers (Note:2) -94 Payment to employees (Note:3) -93 Payment towards insurance expense (Note:4) -4 Payment towards interest expense (Assume everything paid as incurred) -59 Inome tax payments (Note:5) -68 Cashflow from operating activities 437 Notes: 1. Computation of total receipt from customers: Assume all sales as credit sales Analyze Accounts receivable account Beginning balance 207 Add:Sales 890 1097 Less:Ending balance 342 Receipt from customers 755 2. Computation of payment made to suppliers: Assume all purchase as credit purchase Cost of goods sold=Opening inventory+Purchase-Closing inventory Purchase=345-443+312=214 Analyze Accounts payable account Beginning balance 108 Add:purchase 214 322 Less:Ending balance 228 Payment to suppliers 94 3. Computation of payment made to emplyees: Analyze salary payable account Beginning balance 84 Add:Salary expenses 129 213 Less:Ending balance 120 Salary paid 93 4. Computation of payment to insurer Analyze prepaid insurance Beginning balance 106 Less:Insurance expenses 53 53 Less:Ending balance 57 Insurance paid -4 5. Computation of payment made towards income tax: Analyze Deferred income tax liability Beginning balance 61 Add:income tax expenses 85 146 Less:Ending balance 78 Insurance paid 68 2 Cashflow from operating activities under indirect method: Net income 85 Adjustments: Loss on sale of machinery 13 Depreciation 132 Gain on sale of building -11 Increase in accounts receivable -135 Decrease in inventory 131 Decrease in prepaid insurance 49 Increase in accounts payable 120 Increase in salaries payable 36 Increase in deferred income tax liability 17 352 Cashflow from operating activities 437