Refer to the income statement and comparative balance sheets for Wolff Company presented in P4-46. REQUIRED: a.
Question:
Refer to the income statement and comparative balance sheets for Wolff Company presented in P4-46.
REQUIRED:
a. Compute Wolff Company's cash flow from operating activities using the direct method. Use the format illustrated in Exhibit 4.5 in the chapter.
Exhibit 4.5:
b. What can we learn from the direct method that may not be readily apparent when reviewing a cash flow statement prepared using the indirect method?
Data from P4-46:
EXHIBIT 4.5 Adjustments to Convert Income Statement Items to Cash Flows from Operating Activities Operating Depreciation, Dividend and expenses Net Sales Cost of Interest Income tax Interest income expense + Gains - Losses income revenue goods sold expense екреnse Adjustments: Add back depreciation Depreciation expense expense Subtract (add) nonoperating gains (losses) Gains Losses Subtract the change in aperating, assets (operating imvestments) Change in accounts Change in inventory Change in related prepaid Change in dividend receivable and interest receivable expenses Add the change im operating habilities Change in unearned Change in accounts Change in related Change in interest payable Change in income tax payable (operating financing) payable accrued liabilities revenue Aeceipts trom customers Receipts from Payments for_ Payments for merchandise Payments for interest o - Payments for income tax Cash from expenses + dividends and interest + 0 - operations
Step by Step Answer:
a b Computing cash flows from operating activities using the direct method provides additional detai...View the full answer
Financial Accounting
ISBN: 9781618533111
6th Edition
Authors: Michelle L. Hanlon, Robert P. Magee, Glenn M. Pfeiffer, Thomas R. Dyckman
Related Video
In order to determine the amount of cash created by operating operations, the indirect technique for preparing the statement of cash flows entails adjusting net income with changes in balance sheet.
Students also viewed these Business questions
-
Refer to the income statement and comparative balance sheets for Arctic Company presented in P4-48. Data from P4-48: REQUIRED: a. Compute Arctic Company's cash flow from operating activities using...
-
Refer to the income statement and balance sheet of Gateway in Exhibits 8.4 and 8.5 on the next page. Required A. Using the Accounts Payable account, estimate the cash paid for inventory in 2000. B....
-
Wolff Company's income statement and comparative balance sheets follow. Cash dividends of $29,000 were declared and paid during 2018. Also in 2018, plant assets were purchased for cash, and bonds...
-
In a plant producing multiple products, would absorption costing overcost or undercost the more complex products? Why?
-
Use the equation of state as shown in Example 13.3 where changes in enthalpy and entropy were found. Find the isothermal change in internal energy in a similar fashion; do not compute it from...
-
Ed Proctor, EDP auditor, approached Manfred Davis, manager of data processing, and said, "I noted that your programmers sometimes operate computer equipment. " "So what?" asked Davis. "That's...
-
Presented below are selected financial data for two competitors. Discuss why the return onequity decreased for each firm. Company X. Company Y. Return on Equity Return Financial on Sales Asset...
-
The following ratios are available for Lin Inc Instructions (a) Is Lins short-term liquidity improving or deteriorating in 2014? Be specific in your answer, referring to relevant ratios. (b) Do...
-
Your company wants to take advantage of the growing Asian market and plans to build a manufacturing facility in the southeast region to support the expansion. Management identified a set of critical...
-
The adjusted trial balance of Karise Repairs on December 31 follows. KARISE REPAIRS Adjusted Trial Balance December 31 Number Account Title Credit Debit $ 26,000 101 Cash 124 Office supplies 2,000...
-
Selected balance sheet, income statement and cash flow statement information from Tesla, Inc. for 2017 and 2016 follows ($ thousands). a. Compute the current ratio and quick ratio for each year and...
-
Refer to the information in Exercise 4-35. Calculate the net cash flow from operating activities using the direct method. Show a related cash flow for each revenue and expense. Also, compute its...
-
Pick the best choices in Problems 1134 by estimating. Do not measure. For metric measurements, do not attempt to convert to the U.S. system. The hardest part of the transition to the metric system is...
-
Do you believe batterer intervention program (BIP) work? Do you believe Victor will commit another act of violence after completing the batterer intervention program (BIP)? Why or why not? Please...
-
Determine the finance charge for the credit card based on the following information: ADB is $7,100 at 13.99% annual simple interest over July
-
Test your Knowledge (Question): Define new public management as an approach to performance management? Define new public service as an approach to performance management? Action Required: Watch the...
-
On December 1, Year 1, Bradley Corporation incurs a 10-year $320,000 mortgage liability in conjunction with the acquisition of an office building. This mortgage is payable in monthly installments of...
-
Name 5 ways you can enhance your study habits. Write one paragraph detailing one study skill you are not currently practicing that may work best for you. Describe your study habits currently and how...
-
For the matched pairs listed in Exercise 1, identify the following components used in the Wilcoxon signed-ranks test: a. Differences d b. The ranks corresponding to the nonzero values of | d | c. The...
-
What are technical skills At what level are they most important and why?
-
Given the characteristics of useful accounting information, complete each of the following statements. (a) For information to be _____, it should have predictive and confirmatory value. (b) _____ is...
-
Given the characteristics of useful accounting information, complete each of the following statements. (a) For information to be _____, it should have predictive and confirmatory value. (b) _____ is...
-
Given the characteristics of useful accounting information, complete each of the following statements. (a) For information to be _____, it should have predictive and confirmatory value. (b) _____ is...
-
Suppose Hillard Manufacturing sold an issue of bonds with a 10-year maturity, a $1,000 par value, a 10% coupon rate, and semiannual interest payments. a.Two years after the bonds were issued, the...
-
Restful RVs Inc. (RRV) is presently enjoying relatively high growth because of a surge in the demand for recreational vehicles.Management expects earnings and dividends to grow at a rate of 35% for...
-
Use the security market line to determine the required rate of return for the following firm's stock. The firm has a beta of 1.05, the required return in the market place is 11.50%, the standard...
Study smarter with the SolutionInn App