Pendleton Enterprises began operations on January 1, 2012. Balance sheet and income statement information for 2010, 2011, and 2012 follow:

Required(a) Prepare the operating sections of the statement of cash flows for 2010, 2011, and 2012 under the direct method.(b) Assume that the $4,000 of outstanding accounts receivable on December 31, 2010, was actually collected before the end of 2010 but that the accounts receivable balances for 2011 and 2012 are unchanged. Prepare the statements of cash flows under the direct method for all three years.(c) Ignore the assumption in (b), and assume alternatively that the company deferred an additional $3,000 on the payment of accounts payable as of December 31, 2010 (i.e., accounts payable equal $5,000, and cash equals $10,000 on December 31, 2010.) the accounts receivable balances for 2011 and 2012 are unchanged. Prepare the operating section of the statements of cash flows for all three periods.(d) How can mangers manipulate cash provided (used) by operations, and what usually happens in the subsequent period?

Transcribed Image Text:

2012 2011 2010 $ 9,000 Cash Accounts receivable Accounts payable S 6,000 8,000 5,000 12,000 14,000 S7,000 5,000 2,000 3,000 14,000 9,000 Revenues 8,000 6,000 Expenses