The following balance sheet and income statement data were taken from the records of Standard Center Manufacturing
Question:
The company sells goods and provides services. All sales are made on account, and cash is received in advance on services with service revenues being recognized after services are performed.
Prepare the operating section of the statement of cash flows, and present it under both the direct and indirect methods.
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2018 2017 BALANCE SHEET $ 20,200 $ 22,800 Cash Accounts receivable 28,800 34,800 Inventory 42,900 43,900 4,100 6,300 Interest receivable Prepaid rent 3,900 1,200 $ 99,900 $109,000 Total current assets Investments 18,200 23,500 Equipment (net) 43,900 62,500 $162,000 $195,000 Total $ 12,500 $ 8,600 Accounts payable Salaries and wages payable 11,100 11,500 Interest payable 1,800 2,100 Dividends payable 900 1,700 Income taxes payable 1,200 3,200 Unearned revenue 7,200 9,600 $ 34,700 $ 36,700 Total current liabilities Notes payable 75,400 97,300 Common stock 25,000 25,000 Retained earnings 26,900 36,000 $162,000 $195,000 Total INCOME STATEMENT Sales revenues $ 67,500 Service revenue 28,200 Interest revenue 7,300 Cost of goods sold (19,500) Salaries and wages expense (28,400) Rent expense (21,500) Interest expense (7,200) Depreciation expense (4,300) Loss on sale of investments (17,900) Net income before taxes $ 4,200 Income tax expense 1,400 Net income $ 2,800
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Standard Center Manufacturing Operating Section Statement of Cash Flows Direct Method For the Year Ended December 31 2018 Cash from operating activiti...View the full answer
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Unearned revenue is money received by an individual or company for a service or product that has yet to be provided or delivered. It can be thought of as a \"prepayment\" for goods or services that a person or company is expected to supply to the purchaser at a later date. As a result of this prepayment, the seller has a liability equal to the revenue earned until the good or service is delivered. This liability is noted under current liabilities, as it is expected to be settled within a year.
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