Refer to the information presented for Milk River Ltd. in P17-11B. Further analysis reveals that accounts payable
Question:
Refer to the information presented for Milk River Ltd. in P17-11B. Further analysis reveals that accounts payable relate to purchases of merchandise inventory.
Instructions
Prepare a cash flow statement for the year using the direct method.
TAKING IT FURTHER
Explain why it is important to know if the company paid cash or financed the purchase of equipment and how this is shown on the cash flow statement.
MILK RIVER LTD. Balance Sheet December 31 Assets Cash Accounts receivable Inventory Property, plant, and equipment Accumulated depreciation Goodwil 2017 2016 $13,000 32,000 33,000 90,000 (30,000) 5,000 $143,000 $ 5,000 24,000 20,000 78,000 (24,000) 16,000 $119,000 Total assets Liabilities and Shareholders' Equit Accounts payable Income taxes payable Notes payable Common shares Retained earnings 18,000 2,000 42,000 18,000 63,000 $143,000 15,000 4,000 52,750 14,000 33,250 $119,000 Total liabilities and shareholders' equity MILK RIVER LTD. Income Statement Year Ended December 31, 2017 Sales Cost of goods sold Gross profit Operating expenses Gain on sale of equipment Impairment loss on goodwill Profit from Other revenues and expenses $256,000 140,000 116,000 $64,000 (2,000) 11,000 73,000 43,000 operations Interest expense Profit before income tax Income tax expense Profit 4,000 39,000 9,250 29,750
Step by Step Answer:
MILK RIVER LTD Cash Flow Statement Direct Method Year Ended December 31 2017 Cash flows from operating activities Cash receipts from customers 1 24800...View the full answer
Accounting Principles
ISBN: 978-1119048473
7th Canadian Edition Volume 2
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak
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 Managerial Accounting questions
-
Refer to the information presented in Exercise 6.27. REQUIRED Using the FIFO method, prepare a schedule calculating the cost per equivalent unit forDecember. Work in process, December 1 Costs added...
-
Refer to the information presented in Exercise 6.27. REQUIRED Prepare a process cost report under the weighted averagemethod. Work in process, December 1 Costs added in December Direct Materials...
-
Refer to the information presented in Exercise 6.27. REQUIRED Prepare a process cost report under the FIFOmethod. Work in process, December 1 Costs added in December Direct Materials $19,200 31,200...
-
Write the acceleration vector a at the point indicated as a sum of tangential and normal components. r(0) = (cos, sin 20), 0 =
-
A review of the ledger of Baylor Company at December 31, 2012, produces the following data pertaining to the preparation of annual adjusting entries.1. Salaries and Wages Payable $0. There are eight...
-
Suppose a company is experiencing problems with omitted transactions in the conversion processes: i.e., inventory transactions are not always being recorded as they occur. How can an ERP system help...
-
An alternative to using \(d=1 / u\) in a binomial model is to use the available degree of freedom by setting \(p=1 / 2\). (a) Let \(p=1 / 2\), and find the values of \(u\) and \(d\) that satisfy the...
-
Plants Plus operates a commercial plant nursery, where it propagates plants for garden centers throughout the region. Plants Plus has $4,950,000 in assets. Its yearly fixed costs are $650,000, and...
-
How do organizational learning theories, such as the learning organization concept and knowledge management practices, contribute to sustained competitive advantage and organizational resilience in...
-
A soft drink bottling company is interested in controlling its filling operation. Random samples of size 4 are selected and the fill weight is recorded. Table 7-17 shows the data for 24 samples. The...
-
The financial statements of Milk River Ltd. follow: Additional information: 1. Equipment costing $24,000 was purchased with an $8,000 down payment and the remainder was financed with a note payable....
-
Selected information for two competitors, The Gap Inc. and lululemon athletica inc., follows: Instructions (a) Calculate the free cash flow for each company. (b) Which company appears to be in a...
-
Consider the following cash flows and present-worth profiles on Page 218: (a) Determine the values for X and Y. (b) Calculate the terminal project balance of Project 1 at MARR = 24%. (c) Find the...
-
Suppose that the FOMC decides to lower its target for the federal funds rate. How can it use open market operations to accomplish this goal? How can the FOMC use open market operations to raise its...
-
Prepare yourself for an audit by collecting all relevant tax records from the last year. Include all pay stubs that verify deductions, credit card bills and their matching receipts that verify...
-
Call a certified public accountant (CPA) or enrolled agent and explain that you are a student current1y studying taxes. Ask the accountant to explain three of the most commonly recommended tax saving...
-
An article in the Economist magazine observed: Creating more inflation is harder than it sounds. . . . It requires aggregate demand to return to, and exceed, potential output. Use an ADAS graph to...
-
Go to www.youtube.com/watch?v=XU0llRltyFM to view a brief introduction to the techniques of Scrum for new development projects. What are time estimates for completing the different user stories so...
-
For the analysis of the birthday paradox, is it important that the birthdays be mutually independent, or is pairwise independence sufficient? Justify your answer.
-
Given the table below, about how much force does the rocket engine exert on the 4.0 kg payload? Distance traveled with rocket engine firing (m) Payload final velocity (m/s) 500 320 490 310 1020 450...
-
Slovak Plumbing Company pays its support staff weekly and its plumbers on a semimonthly basis. The following support staff payroll information is available for the week ended May 12, 2018: The...
-
Steigs Sports Store has a customer loyalty program in which it issues points to customers for every cash purchase that can be applied to future purchases. For every dollar spent, a customer receives...
-
Silver Cloud manufactures and sells computers for $2,000 each, with a two-year parts and labour warranty. Based on prior experience, the company expects, on average, to incur warranty costs equal to...
-
If a set of m+1 data points (x,y) are to be represent by a least squares fit of y=c logx derive an expression for c in terms of x and y.
-
5 If 0 = then 4 cos(0) = sin(0) =
-
Determine the reactions of the given beam using slope deflection method. P = 25 kN, P2 = 25 kN, and w = 25 kN/m P1 P2 2m B 2m C 4m 21 Numerical answer in 4 decimal places and positive values only: RA...
Study smarter with the SolutionInn App