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
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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