Prepare a schedule of cash flows from operating activities

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Reference no: EM13850535

Task 1- Cash Flows from Operating Activities: Indirect Method

The condensed single-step income statement for the year ended December 31, 2014, of Conti Chemical Company, a distributor of farm fertilizers and herbicides, follows.

Sales

 

$26,000,000

Less: Cost of goods sold

$15,200,000

 

Operating expenses (including depreciation of $1,640,000)

7,600,000

 

Income taxes expense

800,000

23,600,000

Net income

 

$2,400,000

Selected accounts from Conti Chemical's balance sheets for 2014 and 2013 follow

 

2014

2013

Accounts receivable

$4,800,000

$3,400,000

Inventory

1,680,000

2,040,000

Prepaid expenses

520,000

360,000

Accounts payable

1,920,000

1,440,000

Accrued liabilities

120,000

200,000

Income taxes payable

280,000

240,000

Prepare a schedule of cash flows from operating activities using the indirect method.

Task 2- Classification of Cash Flow Transactions

CONCEPT Analyze each transaction listed in the table that follows and place X's in the appropriate columns to indicate the transaction's classification and its effect on cash flows using the indirect method.

 

Cash Flow Classification

Effect on Cash Flows

Transaction

Operating Activity

Investing Activity

Financing Activity

Noncash Transaction

Increase

Decrease

No Effect

1. Increased accounts payable.

 

 

 

 

 

 

 

2. Decreased inventory.

 

 

 

 

 

 

 

3. Increased prepaid insurance.

 

 

 

 

 

 

 

4. Earned a net income.

 

 

 

 

 

 

 

5. Declared and paid a cash dividend.

 

 

 

 

 

 

 

6. Issued stock for cash.

 

 

 

 

 

 

 

7. Retired long-term debt by issuing stock.

 

 

 

 

 

 

 

8. Purchased a long-term investment with cash.

 

 

 

 

 

 

 

9. Sold trading securities at a gain.

 

 

 

 

 

 

 

10. Sold a machine at a loss.

 

 

 

 

 

 

 

11. Retired fully depreciated equipment.

 

 

 

 

 

 

 

12. Decreased interest payable.

 

 

 

 

 

 

 

13. Purchased available-for-sale securities (long-term).

 

 

 

 

 

 

 

14. Decreased dividends receivable.

 

 

 

 

 

 

 

15. Decreased accounts receivable.

 

 

 

 

 

 

 

16. Converted bonds to common stock.

 

 

 

 

 

 

 

17. Purchased 90-day Treasury bill.

 

 

 

 

 

 

 

 

Reference no: EM13850535

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