Statement of Cash FlowsIndirect Method Refer to all of the facts in Problem 12-6A. Presented here are
Question:
Statement of Cash Flows—Indirect Method Refer to all of the facts in Problem 12-6A.
Presented here are comparative balance sheets:
Required
1. Prepare a statement of cash flows for 2010 using the indirect method in the Operating Activities section.
2. On the basis of your statement in (1), draft a brief memo to the president to explain why cash increased during such an unprofitable year. Include in your memo your recommendations for improving the company’s bottom line.
Transcribed Image Text:
For the Year Ended December 31, 2010 $350,000 Sales revenue Cost of goods sold Gross profit Operating expenses 150,000 $200,000 250,000 $ (50,000) 10,000 $ (60,000) Loss before interest and taxes Interest expense Net loss
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1 Changes in account balances and explanations in thousands of dollars Net Change Dr Cr Explanation Cash 15 Accounts receivable 50 Inventory 0 Prepayments 1 Land 100 Purchase c Plant and equipment 250 ...View the full answer
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Using Financial Accounting Information The Alternative to Debits and Credits
ISBN: 978-1133161646
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Authors: Gary A. Porter, Curtis L. Norton
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