Question

The controller of Infinity Stone Corporation has provided you with the following information: Infinity Stone Corporation...

The controller of Infinity Stone Corporation has provided you with the following information:

Infinity Stone Corporation

Income Statement

For the Year Ended December 31, 2018

                                           Net sales                                                                       

$620,000

                                           Operating expenses                                                   

410,000

                                           Income from operations                                          

210,000

                                           Other revenues and expenses                                

                                                        Gain on sale of equipment                       $30,000

                                                        Interest expense                                        8,000

                                                                                                                                   $22,000

                                           Income before income taxes                                 

232,000

Net income   

                                                       

Infinity Stone Corporation

Comparative Account Information

Relating to Operations

For the Year Ended December 31, 2018

                           

                                                                                                                   2018                                                                   2017

                                                           Accounts receivable                $56,000                                                                                   $40,000

                                                           Prepaid insurance                         5,000 6,000

                                                           Accounts payable                       59,000 47,000

                                                           Interest payable                               600 1,500

                                                           Income taxes payable                  4,200 6,000

                                                           Unearned revenue                     20,000 14,000

Required

1. Prepare a statement of cash flows (for operating activities only) for the year ended December 31, 2018, using the indirect method.

Business   Accounting   
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Answer #1
Infinity Stone Corporation - Cash flow from operating activities -31.12.2018
Particulars Details Amount
Cash flow from Operating Activites:
Income from operations $210,000.00
Adjustment to reconcile net income to net cash provided by operating activities:
Increase in accounts receivables -$16,000.00
Increase in prepaid insurance -$1,000.00
Decrease in unearned revenue -$6,000.00
Decrease in accounts payable -$12,000.00
Income tax paid -$4,200.00
Net cash provided by operating activities $170,800.00

Note: Taxes and net income figures is missing in this question. It was assumed that provision for income tax for 2018 is $6,000 and income tax of 2017 amounting $4,200 was paid in 2018.

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