Question

Swasey Company provided the following partial comparative balance sheets and the income statement for 20X2. 1 20X1 20X2 2 Current Assets 3 Accounts receivable 755,000.00 677,000.00 4 Inventories 295,000.00 315,000.00 5 Current liabilities 6 Wages payable 695,000.00 690,000.00 Swasey Company Partial Comparative Balance Sheets At December 31, 20X1 and 20X2 1 20X1 20X2 2 Current Assets 3 Accounts receivable 755,000.00 677,000.00 4 Inventories 295,000.00 315,000.00 5 Current liabilities 6 Wages payable 695,000.00 690,000.00 1 Revenues 3,140,000.00 2 Gain on sale of equipment 110,000.00 3 Cost of goods sold (1,930,000.00) 4 Depreciation expense (270,000.00) 5 Interest expense (10,000.00) 6 Net income $1,040,000.00 Swasey Company Income Statement For the Year Ended December 31, 20X2 1 Revenues 3,140,000.00 2 Gain on sale of equipment 110,000.00 3 Cost of goods sold (1,930,000.00) 4 Depreciation expense (270,000.00) 5 Interest expense (10,000.00) 6 Net income $1,040,000.00 Required: Compute operating cash flows using the indirect method. Refer to the list below for the exact wording of an amount description within your Statement of Cash Flows. Amount Descriptions Add cost of goods sold Add interest expense Decrease in accounts receivable Decrease in inventories Decrease in wages payable Depreciation expense Gain on sale of equipment Increase in accounts receivable Increase in inventories Increase in wages payable Less cost of goods sold Loss on sale of equipment Net cash from financing activities Net cash from investing activities Net cash from operating activities Net income Net loss Compute operating cash flows using the indirect method. (Note: Use a minus sign to indicate any decreases in cash or cash outflows. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.) Swasey Company Statement of Cash Flows Year Ending December 31, 20X2 1 2 Add (deduct) adjusting items: 3 4 5 6 7 8 1 2 Add (deduct) adjusting items: 3 4 5 6 7 8 Swasey Company Statement of Cash Flows Year Ending December 31, 20X2 1 2 Add (deduct) adjusting items: 3 4 5 6 7 8

Answer 1

Solution:

Swasey Company
Statement of Cash Flows (Partial)
For year 20X2
Particulars	Details	Amount
Cash Flow from Operating Activities:
Net Income	$1,040,000.00
Adjustments to reconcile net income to net cash provided by operations:
Depreciation Expense	$270,000.00
Gain on sale of equipment	-$110,000.00
Decrease in accounts receivables ($755,000 - $677,000)	$78,000.00
Increase in inventory ($315,000 - $295,000)	-$20,000.00
Decrease in Wages Payable ($695,000 - $690,000)	-$5,000.00
Net Cash provided by operating activities		$1,253,000.00