Question

Lansing Company’s current-year income statement and selected balance sheet data at December 31 of the current...

Lansing Company’s current-year income statement and selected balance sheet data at December 31 of the current and prior years follow.

LANSING COMPANY
Income Statement
For Current Year Ended December 31
Sales revenue $ 133,200
Expenses
Cost of goods sold 54,000
Depreciation expense 18,000
Salaries expense 30,000
Rent expense 10,200
Insurance expense 5,000
Interest expense 4,800
Utilities expense 4,000
Net income $ 7,200

  

LANSING COMPANY
Selected Balance Sheet Accounts
At December 31 Current Year Prior Year
Accounts receivable $ 6,800 $ 8,200
Inventory 3,180 2,140
Accounts payable 5,600 7,000
Salaries payable 1,120 820
Utilities payable 460 280
Prepaid insurance 380 520
Prepaid rent 460 300

Required:
Prepare the operating activities section of the statement of cash flows using the indirect method for the current year. (Amounts to be deducted should be indicated with a minus sign.)

Business   Accounting   
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Answer #1

Answer-

LANSING COMPANY
STATEMENT OF CASH FLOWS PARTIAL (USING INDIRECT METHOD)
FOR THE YEAR ENDED 31
Particulars Amount
$
Cash flow from operating activities
Net Income 7200
Adjustments to reconcile net income to net cash provided by operating activities
Adjustment for non cash effects
Depreciation expenses 18000
Change in operating assets & liabilities
Decrease in accounts receivable 1400
Increase in inventories -1040
Decrease in accounts payable -1400
Decrease in prepaid insurance 140
Increase in salaries payable 300
Increase in utilities payable 180
Increase in prepaid rent -160
Net cash flow from operating activities 24620
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