a
Ex. 187
The income statement of Redman Inc. for the year ended December 31, 2014, reported the following condensed information:
Service revenue$600,000
Operating expenses 360,000
Income from operations240,000
Income tax expense 60,000
Net income$180,000
Redman's statement of financial position contained the following comparative data at December31:
2014 2013
Accounts receivable$65,000$40,000
Accounts payable40,00055,000
Income taxes payable6,0003,000
Redman has no depreciable assets. Accounts payable pertains to operating expenses.
Instructions
Prepare the operating activities section of the statement of cash flows using the direct method.
a
Ex. 188
The income statement of Falcone Company is shown below:
FALCONE COMPANY
Income Statement
For the Year Ended December 31, 2014
Sales revenue$8,000,000
Cost of goods sold 5,400,000
Gross profit2,600,000
Operating expenses
Selling expenses$500,000
Administrative expenses700,000
Depreciation expense90,000
Amortization expense 30,000 1,320,000
Net income$1,280,000
Additional information:
1.Accounts receivable increased $300,000 during the year.
2.Inventory increased $250,000 during the year.
3.Prepaid expenses increased $200,000 during the year.
4.Accounts payable to merchandise suppliers increased $150,000 during the year.
5.Accrued expenses payable increased $160,000 during the year.
Instructions
Prepare the operating activities section of the statement of cash flows for the year ended December 31, 2014, for Falcone Company, using the direct method.