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Comparative balance sheet accounts of Larkspur Inc. are presented below. (a) Compute net cash flow from operating activities using the direct method (b) Prepare a
Comparative balance sheet accounts of Larkspur Inc. are presented below.
(a) Compute net cash flow from operating activities using the direct method
(b) Prepare a statement of cash flows using the indirect method.
LARKSPUR INC. COMPARATIVE BALANCE SHEET ACCOUNTS AS OF DECEMBER 31, 2017 AND 2016 December 31 Debit Accounts 2017 2016 Cash $41,900 $33,600 Accounts Receivable 60,500 70,600 Inventory 29,900 24,000 Equity investments 22,100 38,800 Machinery 30,300 18,700 Buildings 66,900 56,500 Land 7,600 7,600 $269,300 $239,700 Credit Accounts Allowance for Doubtful Accounts $2,200 $1,500 Accumulated Depreciation-Machinery 5,600 2,200 Accumulated Depreciation-Buildings 13,700 9,000 Accounts Payable 35,300 24,700 Accrued Payables 3,400 2,600 Long-Term Notes Payable 20,800 31,200 Common Stock, no-par 150,000 125,000 38,300 Retained Earnings 43,500 $269,300 $239,700 Additional data (ignoring taxes) 1. Net income for the year was $40,700. 2. Cash dividends declared and paid during the year were $20,900. 3. A 20% stock dividend was declared during the year. $25,000 of retained earnings was capitalized 4. Equity investments (level of ownership is less than 20 that cost $24,900 were sold during the year for $28,600 No unrealized gains and losses were recorded on these investments in 2017 5. Machinery that cost $3,800, on which $750 of depreciation had accumulated, was sold for $2,250 Larkspur's 2017 income statement follows (ignoring taxes) Sales revenue $535,200 Less: Cost of goods sold 377,900 Gross margin 157,300 Less: Operating expenses (includes $8,850 depreciation and $5,817 bad debts) 119,500 Income from operations 37,800 $3,700 Other: Gain on sale of investments Loss on sale of machinery 800) 2,900 $40,700 Net incomeStep by Step Solution
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