Exercise 122

Presented below is the income statement of Cowan, Inc.:

Sales revenue$378,100 Cost of goods sold 225,100 Gross profit$153,000 Operating expenses 83,000 Income before income taxes 70,000 Income taxes 27,900 Net income$42,100

In addition, the following information related to netchangesin working capital is presented:

DebitCredit Cash$12,700 Accounts receivable 21,600 Inventories$19,500 Salaries payable (operating expenses)8,100 Accounts payable 13,000 Income taxes payable 2,800

The company also indicates that depreciation expense for the year was $18,400 and that the deferred tax liability account increased $4,300.

Prepare schedule computing the net cash flow from operating activities by using the indirect method that would be shown on a statement of cash flows.(Show amounts that decrease cash flow with either a - sign e.g. -10,000 or in parenthesis e.g. (10,000).)

Cowan, Inc.

Statement of Cash Flows (Partial)

(Indirect Method)

Cash at Beginning of Period

Cash at End of Period

Cash Flows from Financing Activities

Cash Flows from Investing Activities

Cash Flows from Operating Activities

Net Cash Provided by Financing Activities

Net Cash Provided by Investing Activities

Net Cash Provided by Operating Activities

Net Cash Used by Financing Activities

Net Cash Used by Investing Activities

Net Cash Used by Operating Activities

Net Decrease in Cash

Net Increase in Cash

Decrease in Trade Accounts Payable

Increase in Deferred Tax Liability

Increase in Trade Accounts Receivable

Increase in Salaries Payable

Decrease in Trade Accounts Receivable

Increase in Income Taxes Payable

Increase in Inventories

Decrease in Salaries Payable

Increase in Trade Accounts Payable

Decrease in Inventories

Decrease in Income Taxes Payable

Depreciation expense

Decrease in Deferred Tax Liability

Net Income

$

Adjustments to reconcile net income to

Cash at Beginning of Period

Cash at End of Period

Cash Flows from Financing Activities

Cash Flows from Investing Activities

Cash Flows from Operating Activities

Net Cash Provided by Financing Activities

Net Cash Provided by Investing Activities

Net Cash Provided by Operating Activities

Net Cash Used by Financing Activities

Net Cash Used by Investing Activities

Net Cash Used by Operating Activities

Net Decrease in Cash

Net Increase in Cash

Increase in Deferred Tax Liability

Decrease in Salaries Payable

Decrease in Income Taxes Payable

Depreciation Expense

Increase in Income Taxes Payable

Increase in Trade Accounts Payable

Net Income

Decrease in Trade Accounts Payable

Increase in Trade Accounts Receivable

Decrease in Trade Accounts Receivable

Increase in Inventories

Decrease in Inventories

Increase in Salaries Payable

Decrease in Deferred Tax Liability

$

Decrease in Deferred Tax Liability

Decrease in Inventories

Decrease in Salaries Payable

Increase in Inventories

Net Income

Decrease in Trade Accounts Payable

Increase in Income Taxes Payable

Increase in Trade Accounts Receivable

Increase in Trade Accounts Payable

Increase in Salaries Payable

Decrease in Income Taxes Payable

Increase in Deferred Tax Liability

Depreciation Expense

Decrease in Trade Accounts Receivable

Increase in Deferred Tax Liability

Decrease in Trade Accounts Receivable

Decrease in Trade Accounts Payable

Increase in Trade Accounts Receivable

Decrease in Deferred Tax Liability

Increase in Inventories

Increase in Income Taxes Payable

Decrease in Income Taxes Payable

Net Income

Increase in Salaries Payable

Decrease in Inventories

Depreciation Expense

Decrease in Salaries Payable

Increase in Trade Accounts Payable

Decrease in Inventories

Net Income

Decrease in Trade Accounts Receivable

Increase in Salaries Payable

Decrease in Trade Accounts Payable

Increase in Deferred Tax Liability

Depreciation Expense

Decrease in Salaries Payable

Increase in Trade Accounts Receivable

Increase in Inventories

Decrease in Income Taxes Payable

Increase in Trade Accounts Payable

Increase in Income Taxes Payable

Decrease in Deferred Tax Liability

Decrease in Deferred Tax Liability

Decrease in Trade Accounts Payable

Increase in Inventories

Decrease in Salaries Payable

Decrease in Inventories

Net Income

Depreciation Expense

Increase in Income Taxes Payable

Increase in Trade Accounts Payable

Increase in Trade Accounts Receivable

Decrease in Trade Accounts Receivable

Increase in Salaries Payable

Decrease in Income Taxes Payable

Increase in Deferred Tax Liability

Decrease in Salaries Payable

Decrease in Inventories

Decrease in Trade Accounts Receivable

Depreciation Expense

Decrease in Trade Accounts Payable

Increase in Inventories

Decrease in Income Taxes Payable

Increase in Trade Accounts Receivable

Increase in Deferred Tax Liability

Increase in Salaries Payable

Decrease in Deferred Tax Liability

Increase in Income Taxes Payable

Net Income

Increase in Trade Accounts Payable

Depreciation Expense

Decrease in Trade Accounts Payable

Decrease in Deferred Tax Liability

Increase in Trade Accounts Receivable

Increase in Income Taxes Payable

Increase in Deferred Tax Liability

Decrease in Inventories

Net Income

Decrease in Salaries Payable

Decrease in Income Taxes Payable

Increase in Salaries Payable

Increase in Trade Accounts Payable

Decrease in Trade Accounts Receivable

Increase in Inventories

Cash at Beginning of Period

Cash at End of Period

Cash Flows from Financing Activities

Cash Flows from Investing Activities

Cash Flows from Operating Activities

Net Cash Provided by Financing Activities

Net Cash Provided by Investing Activities

Net Cash Provided by Operating Activities

Net Cash Used by Financing Activities

Net Cash Used by Investing Activities

Net Cash Used by Operating Activities

Net Decrease in Cash

Net Increase in Cash

$

Prepare schedule computing the net cash flow from operating activities by using the direct method that would be shown on a statement of cash flows.

Cowan, Inc.

Statement of Cash Flows (Partial)

Direct Method

Cash at Beginning of Period

Cash at End of Period

Cash Flows from Financing Activities

Cash Flows from Investing Activities

Cash Flows from Operating Activities

Net Cash Provided by Financing Activities

Net Cash Provided by Investing Activities

Net Cash Provided by Operating Activities

Net Cash Used by Financing Activities

Net Cash Used by Investing Activities

Net Cash Used by Operating Activities

Net Decrease in Cash

Net Increase in Cash

Cash Paid to Suppliers

Increase in Inventories

Increase in Salaries Payable

Decrease in Inventories

Cash Received from Customers

Dividends Received

Cash Payments for Operating Expenses

Decrease in Salaries Payable

Increase in Accounts Receivable

Taxes Paid

Operating Expenses Paid

Decrease in Accounts Receivable

$

Decrease in Inventories

Cash Paid to Suppliers

Cash Payments for Operating Expenses

Operating Expenses Paid

Increase in Inventories

Cash Received from Customers

Increase in Accounts Receivable

Decrease in Accounts Receivable

Increase in Salaries Payable

Decrease in Salaries Payable

Dividends Received

Taxes Paid

$

Decrease in Salaries Payable

Operating Expenses Paid

Taxes Paid

Cash Received from Customers

Dividends Received

Decrease in Inventories

Cash Paid to Suppliers

Cash Payments for Operating Expenses

Increase in Inventories

Increase in Accounts Receivable

Decrease in Accounts Receivable

Increase in Salaries Payable

Increase in Inventories

Cash Paid to Suppliers

Cash Payments for Operating Expenses

Decrease in Inventories

Increase in Accounts Receivable

Dividends Received

Taxes Paid

Decrease in Accounts Receivable

Operating Expenses Paid

Increase in Salaries Payable

Decrease in Salaries Payable

Cash Received from Customers

Cash at Beginning of Period

Cash at End of Period

Cash Flows from Financing Activities

Cash Flows from Investing Activities

Cash Flows from Operating Activities

Net Cash Provided by Financing Activities

Net Cash Provided by Investing Activities

Net Cash Provided by Operating Activities

Net Cash Used by Financing Activities

Net Cash Used by Investing Activities

Net Cash Used by Operating Activities

Net Decrease in Cash

Net Increase in Cash

$