What is the purpose of the statement of cash flows? What information does it provide? (b) Prepare
Question:
What is the purpose of the statement of cash flows? What information does it provide?
(b) Prepare the operating activities section of the statement of cash flows for the year ended December 31, 2018, for Vancare Company, using (1) the indirect method (2) the direct method.
Vancare Company Income Statement For the year ended December 31, 2018 | ||
Sales revenue | $6,900,000 | |
Cost of goods sold | ||
Beginning inventory | $1,900,000 | |
Purchases | $4,400,000 | |
Goods available for sale | $6,300,000 | |
Ending inventory | $1,600,000 | |
Cost of goods sold | $4,700,000 | |
Gross Profit | $2,200,000 | |
Operating expenses | ||
Selling expense | $ 450,000 | |
Administrative expense | $ 700,000 | $1,150,000 |
Net Income | $1,050,000 | |
Additional information:
1. Accounts receivable decreased $310,000 during the year.
2. Prepaid expenses increased $170,000 during the year.
3. Accounts payable to suppliers of merchandise decreased $275,000 during the year.
4. Accrued expenses payable decreased $120,000 during the year.
5. Administrative expenses include depreciation expense of $60,000.
Intermediate Accounting
ISBN: 978-0470161012
9th Canadian Edition, Volume 2
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield.