Shim Company presents its statement of cash flows using the indirect method. The following accounts and corresponding
Question:
Shim Company presents its statement of cash flows using the indirect method. The following accounts and corresponding balances were drawn from Shim’s Year 2 and Year 1 year-end balance sheets.
The income statement reported a $1,500 gain on the sale of equipment, an $800 loss on the sale of land, and $3,600 of depreciation expense. Net income for the period was $47,300.
Required
Prepare the operating activities section of the statement of cash flows.
Account Title Year 2 Year 1 Accounts receivable Prepaid rent Interest receivable Accounts payable Salaries payable Unearned revenue $36,000 2,400 $37,200 1,800 400 10,400 5,200 5,400 600 4,500 3,600
Step by Step Answer:
Cash Flows From Operating Activities Net Income 47300 Add Decrease in accounts rec...View the full answer
Introductory Financial Accounting for Business
ISBN: 978-1260299441
1st edition
Authors: Thomas Edmonds, Christopher Edmonds
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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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