The following cash flow information pertains to the 20X1 operations of Fishmaster, Inc., a maker of fishing
Question:
The following cash flow information pertains to the 20X1 operations of Fishmaster, Inc., a maker of fishing equipment.
Cash collections from customers | $ 79,533 |
Cash payments to suppliers of inventory | 64,097 |
Cash payments for selling and administrative expenses | 12,536 |
Cash payments for interest | 1,548 |
Cash payments for income taxes | 980 |
Cash provided by operating activities | 372 |
The following additional information comes from Fishmaster’s 20X1 income statement:
Net income ........................................ $ 2,401
Depreciation of equipment ............... 6,380
The following additional information comes from Fishmaster’s 20X0 and 20X1 comparative balance sheets (decreases are in parentheses):
Change in accounts receivable | $ 1,850 |
Change in inventory | 5,299 |
Change in accounts payable | (1,711) |
Change in accrued selling and administrative expenses | 910 |
Change in taxes payable | (342) |
Change in accrued interest payable | (117) |
Required:
1. Use the preceding information to derive Fishmaster’s 20X1 income statement.
2. Use the same information to compute Fishmaster’s 20X1 cash flow from operating activities under the indirect method (that is, derive cash flow from operating activities by making the necessary adjustments to net income).
3. Provide a brief explanation for the difference observed between net income and cash provided by operating activities.
Step by Step Answer:
Financial Reporting And Analysis
ISBN: 9781260247848
8th Edition
Authors: Lawrence Revsine, Daniel Collins, Bruce Johnson, Fred Mittelstaedt, Leonard Soffer