The following account balances for the noncash current assets and current liabilities of Labrador Company are...

 

 

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The following account balances for the noncash current assets and current liabilities of Labrador Company are available: December 31 2017 2016 Accounts receivable $ 4,000 $ 6,000 Inventory 32,000 25,000 Office supplies 7,000 10,000 Accounts payable 7,500 4,500 Salaries and wages payable 1,500 2,500 Interest payable 500 1,000 Income taxes payable 4,500 3,000 In addition, the income statement for 2017 is as follows: In addition, the income statement for 2017 is as follows: 2017 Sales revenue $100,000 Cost of goods sold 75,000 $ 25,000 General and administrative expense $ 8,000 Gross profit Depreciation expense 3,000 Total operating expenses $ 11,000 Income before interest and taxes $ 14,000 Interest expense 3,000 Income before tax $ 11,000 Income tax expense 5,000 Net income $ 6,000 Required: Required: 1. Prepare the Operating Activities section of the statement of cash flows using the direct method. Use the minus sign to indicate cash payments, cash outflows, or decreases in cash. Labrador Company Partial Statement of Cash Flows For the Year Ended December 31, 2017 Cash Flows from Operating Activities Cash collected from customers 102,000 Cash payments for: Inventory Cost of goods sold x Accounts payable x Total cash payments 2. All of the following reveal what the use of the direct method does which the indirect method does not do EXCEPT for: a. The direct method shows the users the specific amounts collected and paid for operating purposes. b. The indirect method just simply reconciles net income of the period to the cash flow from operations without having to detail the cash actually recelved and the cash paid. C. The use of the direct method shows collections from customers and amounts paid for operating purpos d. The use of the direct method will give a higher net cash flow from operating activities as compared to the indirect method. a X The following account balances for the noncash current assets and current liabilities of Labrador Company are available: December 31 2017 2016 Accounts receivable $ 4,000 $ 6,000 Inventory 32,000 25,000 Office supplies 7,000 10,000 Accounts payable 7,500 4,500 Salaries and wages payable 1,500 2,500 Interest payable 500 1,000 Income taxes payable 4,500 3,000 In addition, the income statement for 2017 is as follows: In addition, the income statement for 2017 is as follows: 2017 Sales revenue $100,000 Cost of goods sold 75,000 $ 25,000 General and administrative expense $ 8,000 Gross profit Depreciation expense 3,000 Total operating expenses $ 11,000 Income before interest and taxes $ 14,000 Interest expense 3,000 Income before tax $ 11,000 Income tax expense 5,000 Net income $ 6,000 Required: Required: 1. Prepare the Operating Activities section of the statement of cash flows using the direct method. Use the minus sign to indicate cash payments, cash outflows, or decreases in cash. Labrador Company Partial Statement of Cash Flows For the Year Ended December 31, 2017 Cash Flows from Operating Activities Cash collected from customers 102,000 Cash payments for: Inventory Cost of goods sold x Accounts payable x Total cash payments 2. All of the following reveal what the use of the direct method does which the indirect method does not do EXCEPT for: a. The direct method shows the users the specific amounts collected and paid for operating purposes. b. The indirect method just simply reconciles net income of the period to the cash flow from operations without having to detail the cash actually recelved and the cash paid. C. The use of the direct method shows collections from customers and amounts paid for operating purpos d. The use of the direct method will give a higher net cash flow from operating activities as compared to the indirect method. a X

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Operating Activities section of the statement of cash flows using the direct method Labrador Company ... View the full answer