Prepare a direct-method operating section of the statement of cash flows for 1997 using the information available
Question:
Prepare a direct-method operating section of the statement of cash flows for 1997 using the information available in the balance sheet and income statement (Exhibits 3 and 4), as well as the supplementary cash flow information (Exhibit 5). The below-attached template on the following page may be useful in answering this question. Be sure to explain your answers in summary form and list the additions/subtractions and where from the income statement and balance sheet these numbers are being pulled from for your final calculation (explain your logic).
TEMPLATE BELOW:
Income Statement | Adjustments | Cash Flow (Direct-method) | |||||
Net sales | 147,758 | +/– | = | Cash from Customers | |||
Cost of sales | –118,945 | +/– | = | Cash Paid for Inventory | |||
Marketing and sales | –38,964 | +/– | = | Cash paid for marketing | |||
Product development | –12,485 | +/– | = | Cash paid for product dev. | |||
General and administrative | –1,831 | +/– | = | Cash flow paid for G&A | |||
Interest income | 1,898 | +/– | = | Interest received | |||
Interest expense | –279 | +/– | = | Interest Paid | |||
Depr. and amort. | –3,388 | +/– | = | ||||
Amort. of compensation | –1,354 | +/– | = | ||||
Net Loss | –27,590 | CFO |
(Note that the template disaggregates total “General and administrative expenses” reported in the Statement of Operations into three categories: (i) General and administrative, (ii) Depreciation and amortization, and (iii) Amortization of compensation)
Financial Reporting and Analysis
ISBN: 978-0078025679
6th edition
Authors: Flawrence Revsine, Daniel Collins, Bruce, Mittelstaedt, Leon