Cara Cara Packing Inc. reported the following information for 2012: Net income $
ID: 2699055 • Letter: C
Question
Cara Cara Packing Inc. reported the following information for 2012:
Net income
$ 1,500,000
Increase in net current assets
60,000
Increase in net current liabilities
65,000
Gain on sale of investments
9,000
Depreciation expense
130,000
Loss on bond redemption
10,000
Prepare the operating activities section of Cara Cara%u2019s statement of cash flows using the direct method.
Net income
$ 1,500,000
Increase in net current assets
60,000
Increase in net current liabilities
65,000
Gain on sale of investments
9,000
Depreciation expense
130,000
Loss on bond redemption
10,000
Explanation / Answer
Cash Collections Receipts from Sales
= Sales + Decrease (or - increase) in Accounts Receivable
= 9000+130000
Cash payments for purchases = cost of goods sold + increase (or - decrease) in inventory + decrease (or - increase) in accounts payable
=5000+10000
Cash interest = interest expense - increase (or + decrease) interest payable + amortization of bond premium (or - discount)
=10000+ 6000