Exercise 16-1 Cash flow from operations (indirect) L.O. P2Rasheed Company reports net income of $540,000 for the year ended December 31, 2011. It also reports $97,200 depreciation expense and a $9,500 gain on the sale of machinery. Its comparative balance sheets reveal a $43,200 increase in accounts receivable, $22,140 increase in accounts payable, $11,880 decrease in prepaid expenses, and $16,740 decrease in wages payable.Required:Prepare only the operating activities section of the statement of cash flows for 2011 using the indirect method. (Amounts to be deducted should be indicated with a minus sign. Omit the “$” sign in your response.)Statement of Cash FlowsCash flows from operating activities $Adjustments to reconcile net income to operating cash flow $Net cash from operating activities $Exercise 16-2 Cash flow classification (indirect) L.O. C1The following transactions and events occurred during the year. Assuming that this company uses the indirect method to report cash provided by operating activities, indicate where each item would appear on its statement of cash flows by placing an x in the appropriate column. (Leave no cells blank – If the item does not appear in the category, please select “NA”.)Statement of Cash flowsNoncash Investing and Financing Activities Not Reported on Statement or in NotesOperating Activities Investing Activities Financing Activitiesa. Accounts receivable decreased in the yearb. Purchased land by issuing common stockc. Paid cash to purchase inventoryd. Sold equipment for cash, yielding a losse. Accounts payable decreased in the yearf. Income taxes payable increased in the yearg. Declared and paid a cash dividendh. Recorded depreciation expensei. Paid cash to settle long-term note payablej. Prepaid expenses increased in the yearExercise 16-4 Cash flows from operating activities (indirect) L.O. P2Roney Companyâs calendar-year 2011 income statement shows the following: Net Income, $481,000; Depreciation Expense, $59,644; Amortization Expense, $12,025; Gain on Sale of Plant Assets, $9,100. An examination of the companyâs current assets and current liabilities reveals the following changes (all from operating activities): Accounts Receivable decrease, $17,500; Merchandise Inventory decrease, $50,750; Prepaid Expenses increase, $1,700; Accounts Payable decrease, $4,250; Other Payables increase, $646.Use the indirect method to compute cash flow from operating activities. (Amounts to be deducted should be indicated with a minus sign. Omit the “$” sign in your response.)Statement of Cash FlowsCash flows from operating activities $Adjustments to reconcile net income to net cash provided by operating activities
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