Answered step by step
Verified Expert Solution
Question
1 Approved Answer
During the year, Hepworth Company earned a net income of $64,425. Beginning and ending balances for the year for selected accounts are as follows: Account
During the year, Hepworth Company earned a net income of $64,425. Beginning and ending balances for the year for selected accounts are as follows:
Account | ||
Beginning | Ending | |
Cash | $101,000 | $120,300 |
Accounts receivable | 67,100 | 99,550 |
Inventory | 36,500 | 53,100 |
Prepaid expenses | 26,900 | 29,900 |
Accumulated depreciation | 81,500 | 91,300 |
Accounts payable | 46,000 | 55,325 |
Wages payable | 27,400 | 15,200 |
There were no financing or investing activities for the year. The above balances reflect all of the adjustments needed to adjust net income to operating cash flows.
Required:
1. | Prepare a schedule of operating cash flows using the indirect method. |
2. | Suppose that all the data used in Requirement 1 except the ending accounts payable and cash balances are not known. Assume also that you know that the operating cash flow for the year was $20,675. What is the ending balance of accounts payable? |
3. | Conceptual Connection: Hepworth has an opportunity to buy some equipment that will significantly increase productivity. The equipment costs $25,000. Assuming exactly the same data used for Requirement 1, can Hepworth buy the equipment using this years operating cash flows? |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started