Question

Carr Corporation's comparative balance sheet and income statement for last year appear below: Comparative Balance Sheet...

Carr Corporation's comparative balance sheet and income statement for last year appear below:

Comparative Balance Sheet
Ending Balance Beginning Balance
Cash and cash equivalents $ 3,150 $ 25,300
Accounts receivable 90,500 78,100
Inventory 42,100 48,410
Prepaid expenses 9,270 15,450
Long-term investments 259,200 216,000
Property, plant, and equipment 525,300 504,000
Less accumulated depreciation 326,400 318,600
Total assets $ 603,120 $ 568,660
Accounts payable $ 9,900 $ 27,250
Accrued liabilities 26,160 18,020
Income taxes payable 52,900 50,600
Bonds payable 164,800 220,000
Common stock 162,000 140,000
Retained earnings 187,360 112,790
Total liabilities and stockholders' equity $ 603,120 $ 568,660
Income Statement
Sales $ 926,500
Cost of goods sold 463,500
Gross margin 463,000
Selling and administrative expense 280,800
Net operating income 182,200
Income taxes 41,300
Net income $ 140,900

The company declared and paid $66,330 in cash dividends during the year. It did not dispose of any property, plant, and equipment during the year.

Required:

Prepare the operating activities section of the company's statement of cash flows for the year using the direct method. (Enter all amounts as positive values except for adjustments to cash basis that are deducted.)

Homework Answers

Answer #1
Cash flows from Operating Activities (Direct Method)
Particulars Amount
Cash received from customers $913,600
Cash paid to Suupliers ($474540)
Cash paid for Income taxes ($43600)
Cash flows from Operating Activities $395460

Notes:

1. Cassh received from Customer = Sales + Begining Balance - Ending Balance

=$926,500 + $78100 - $90500

=$ 913,600

2. Cash paid to Suppliers = Beginning Balance + Purchases - Ending Balance

Purchases = COGS + Ending Inventory - Beginning Inventory3

= $463500 + $42100 - $48810

=$457,190

cash paid = $457190 + $27250 - $9900

=$474,540

3.Income TAxes paid = Income tax Expense + Ending Balance - Beginning Balance

= $41300 + $52900 - $50600

= $43600

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