Question

For direct method on cash flow, how to adjust on prepaid expenses when the balance sheet doesn't specify which prepaid expenses on company's balance sheet??

-ex: General Admin, interest income, interest expenses, depreciation

Current Assets:

Cash and cash equivalents................................. $109,810 $ 6,248

Short-term investments.................................... 15,256 --

Inventories............................................... 8,971 571

Prepaid expenses and other................................ 3,298 321

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Total current assets.............................. 137,335 7,140

Fixed assets, net........................................... 9,265 985

Deposits.................................................... 166 146

Deferred charges............................................ 2,240 --

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Total assets...................................... $149,006 $ 8,271

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LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

Accounts payable.......................................... $ 32,697 $ 2,852

Accrued advertising....................................... 3,454 598

Accrued product development............................... -- 500

Other liabilities and accrued expenses.................... 6,167 920

Current portion of long-term debt......................... 1,500 --

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Total current liabilities......................... 43,818 4,870

Long-term portion of debt................................... 76,521 --

Long-term portion of capital lease obligation............... 181 --

Stockholders' Equity:

Preferred stock, $0.01 par value:

   Authorized shares -- 10,000,000

   Issued and outstanding shares -- none and 569,396

shares in 1997 and 1996, respectively................. -- 6

Common stock, $0.01 par value:

   Authorized shares -- 100,000,000

   Issued and outstanding shares -- 23,937,169 and

15,900,229 shares in 1997 and 1996, respectively...... 239 159

Additional paid-in capital................................ 63,792 9,873

Deferred compensation..................................... (1,930) (612)

Accumulated deficit....................................... (33,615) (6,025)

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Total stockholders' equity........................ 28,486 3,401

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Total liabilities and stockholders' equity...... $149,006 $ 8,271

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Answer 1

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For direct method on cash flow, how to adjust on prepaid expenses when the balance sheet doesn't specify which prepaid expenses on company's balance sheet??

If the balance sheet doesn't specify which prepaid expenses is on the company's balance sheet then it should be adjusted with operating expenses/ General administrative expenses/ Cost of sales whichever is provided.