Question

1. Terry company's 2017 income statement and comparative balance sheets at December 31 of 2016 and...

1. Terry company's 2017 income statement and comparative balance sheets at December 31 of 2016 and 2017are shown.

Terry Company

                                                                   Income Statement

       For the year Ended December 31, 2017

   Sales                                                 $ 390,000

   Cost of Goods Sold                            235,000

                                                                               _______

     Gross Profit                                                        $ 155,000

   Wages Expenses                              $ 63,000

   Depreciation Expense                        14,000

   Other Operating Expenses                  26,000

   Income Tax Expense                           17,000    120,000

                                                                                ______    ________

     Net Income                                                          $ 35,000

                                                 

Terry Company

Balance Sheets

                                                                      Dec. 31,    Dec. 31,

                Assets                                        2016 2017

                  Cash                                          $ 16,000 $ 30,000

                 Accounts Receivable (net)           28,000           35,000

                 Inventory                                     110,000 84,000

                 Prepaid Expense                          12,000            8,000

                 Plant Assets                                 178,000 130,000

                 Accumulated Depreciation         (76,000)         (62,000)

                                     

                  Total Assets                            $ 268,000        $ 225,000

                                     

                 Liabilities and Stockholders' Equity

                 Accounts Payable                      $ 27,000         $ 14,000

                 Wages Payable                                6,000               2,500

                 Income Tax Payable                        3,000              4,500

                 Common Stock                            135,000          125,000

                 Retained Earnings                          97,000            79,000

                                                                       ________       _________

                Total Liabilities and                   $ 268,000        $ 225,000

               

                   Stockholders' Equity          

  

Cash dividends of $17,000 were declared and paid during 2016 Plant assets of $48,000 were purchased for cash, and later in the year, an additional $10,000 common stock was issued for cash

REQUIRED

          Prepare only the Cash Flows from Operations section of the Cash Flow Statement using the

            indirect method.

Reminder: you need only prepare the Cash Flow from Operations section of the statement

Homework Answers

Answer #1

Prepare only the Cash Flows from Operations section of the Cash Flow Statement using the

            indirect method.

Cash flow from operating activities
Net income 35000
Adjustment to reconcile net income to net cash flow from operating activities
Depreciation expense 14000
Decrease account receivable 7000
Increase inventory -26000
Increase prepaid expense -4000
Increase account payable 13000
Increase wages payable 3500
Decrease income tax payable -1500
6000
Net cash flow from operating activities 41000
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