Based on the information set out in PA-44 below, prepare the cash flows from operating activities section
Question:
Based on the information set out in PA-44 below, prepare the cash flows from operating activities section of the statement of cash flows using the direct method.
Data from PA-44
Zippo Ltd.Income StatementFor the Year Ended December 31, 2016Sales .................................................................................................... ?$2,511,100Cost of goods sold ............................................................................. ? 1,256,000Gross profit ......................................................................................... ? 1,255,100Depreciation of property, plant, and equipment ........................... ?334,400Interest expense ................................................................................. ? ? ? ?75,000Other expenses ................................................................................... ? ? ?256,600Income before income taxes ............................................................. ? ? 589,100Income taxes ........................................................................................ ? ? ?300,000Net income ........................................................................................... ? $ 289,100
Additional information:
- Property, plant, and equipment costing $570,000 was sold for $422,000.
- 100,000 ordinary shares were issued to acquire $450,000 of property, plant, and equipment.
- $212,000 of deferred development costs were capitalized during the year.
- The company nets many items to ??Other Expenses,?? for example, gains and losses on fixed asset sales and some amortization.
- The deferred product development expenditures were all paid in cash.
- The decrease in the bonds payable account was due to the amortization of the premium.
- Zippo has elected to designate its at fair value through profit or loss investments as cash equivalents.
- Zippo has adopted a policy of classifying cash outflows from interest and dividends as financing activities.
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