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1. Exhibit 12-4 Manning Company uses the indirect method to prepare the statement of cash flows. The following amounts are shown in its financial statements

1. Exhibit 12-4
Manning Company uses the indirect method to prepare the statement of cash flows. The following amounts are shown in its financial statements for December 31, 2021 and December 31, 2020.

December 31, 2021

December 31, 2020

Accounts receivable

$ 663,000

$600,000

Cost of goods sold

$1,800,000

Sales revenue

$2,400,000

Accounts payable

$ 255,000

$195,000

Inventory

$ 270,000

$375,000

Salaries payable

$ 45,000

$ 30,000

Salaries expense

$ 165,000

$144,000

Refer to Exhibit 12-4. How will the change in accounts receivable be reported in the operating activities section of the statement of cash flows?

A) None of the answer choices is correct.

B) The increase of $63,000 will be added to net income.

C) The increase of $63,000 will be subtracted from sales revenue.

D) The increase of $63,000 will be subtracted from net income.

E) The increase of $63,000 will be added to sales revenue.

2. Exhibit 12-5
Myers Inc. uses the indirect method to prepare the statement of cash flows. The following amounts are shown in its December 31, 2020, financial statements.

December 31, 2020

December 31, 2019

Accounts receivable

$442,000

$502,000

Cost of goods sold

$1,200,000

Sales revenue

$1,600,000

Accounts payable

$ 170,000

$210,000

Inventory

$ 180,000

$ 130,000

Salaries payable

$ 30,000

$ 38,000

Salaries expense

$ 110,000

$ 96,000

Refer to Exhibit 12-5. How will the change in accounts receivable be reported in the operating activities section of the statement of cash flows?

A) The decrease of $60,000 will be added to net income.

B) The decrease of $60,000 will be subtracted from sales revenue.

C) The decrease of $60,000 will be subtracted from net income.

D) None of the answer choices is correct.

E) The decrease of $60,000 will be added to sales revenue.

3. Exhibit 12-4
Manning Company uses the indirect method to prepare the statement of cash flows. The following amounts are shown in its financial statements for December 31, 2021 and December 31, 2020.

December 31, 2021

December 31, 2020

Accounts receivable

$ 663,000

$600,000

Cost of goods sold

$1,800,000

Sales revenue

$2,400,000

Accounts payable

$ 255,000

$195,000

Inventory

$ 270,000

$375,000

Salaries payable

$ 45,000

$ 30,000

Salaries expense

$ 165,000

$144,000

Refer to Exhibit 12-4. How will the change in inventory be reported in the operating activities section of the statement of cash flows?

A) The decrease of $105,000 will be added to cost of goods sold.

B) None of the answer choices is correct.

C) The decrease of $105,000 will be added to net income.

D) The decrease of $105,000 will be subtracted from cost of goods sold.

E) The decrease of $105,000 will be subtracted from net income.

4. Exhibit 12-4
Manning Company uses the indirect method to prepare the statement of cash flows. The following amounts are shown in its financial statements for December 31, 2021 and December 31, 2020.

December 31, 2021

December 31, 2020

Accounts receivable

$ 663,000

$600,000

Cost of goods sold

$1,800,000

Sales revenue

$2,400,000

Accounts payable

$ 255,000

$195,000

Inventory

$ 270,000

$375,000

Salaries payable

$ 45,000

$ 30,000

Salaries expense

$ 165,000

$144,000

Refer to Exhibit 12-4. How will the change in accounts payable be reported in the operating activities section of the statement of cash flows?

A) None of the answer choices is correct.

B) The increase of $60,000 will be subtracted from net income.

C) The increase of $60,000 will be subtracted from sales revenue.

D) The increase of $60,000 will be added to sales revenue.

E) The increase of $60,000 will be added to net income.

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