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    Module 5

    Uploaded by

    Vikki El

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd

    Module 5

    Uploaded by

    Vikki El
    5 views3 pages

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    Module-5

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    Copyright:

    © All Rights Reserved
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    Download as xlsx, pdf, or txt
    5 views3 pages

    Module 5

    Uploaded by

    Vikki El

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 3

    Problem 5-53

    INDIRECT METHOD DIRECT METHOD

    RIKER COMPANY ADDITIONAL INFO:


    STATEMENT OF CASH FLOWS (INDIRECT METHOD) 1) Sales total
    FOR THE YEAR ENDED DECEMBER 31, 2005 2) COGS
    3) Operating expenses
    Cash flows from operating activities 4) Interest expense
    Net Income $ 68,850 5) Income tax expense
    Adjustments $ 65,000 6) 80% Accounts Payable - Inventory pu
    Depreciation expense $ 10,000 20% Accounts Payable - Operating ex
    Amortization expense $ 7,400 7) Depreciation and amortization are not
    Loss on sale of machine $ (2,330)
    Gain on retirement of long-term debt $ (8,600)
    Increase in accounts receivable $ 12,430 Cash flows from operating activities
    Decrease in inventory $ 1,680 Cost of Goods Sold
    Decrease in prepaid operating expenses $ (2,400)
    Decrease in accounts payable $ 500
    Increase in interest payable $ 2,500
    Increase in income taxes payable $ 86,180
    Net cash provided by operating activities $ 155,030
    Cash flows from investing activities
    Sale of machine $ 12,000
    Purchase of fixed assets $ (78,000)
    Net cash used in investing activities $ (66,000)
    Cash flows from financing activities Cash flows from investing activities
    Retirement of long-term debt $ (65,000) Sale of machine
    Payment of dividends $ (27,000) Purchase of fixed assets
    Net cash used in financing activities $ (92,000) Net cash used in investing activities
    Net decrease in cash $ (2,970) Cash flows from financing activities
    Cash of beginning year $ 5,320 Retirement of long-term debt
    Cash of end of year $ 2,350 Payment of dividends
    Net cash used in financing activities
    DIRECT METHOD

    CASH FROM CUSTOMERS


    SALES
    $ 812,350 A/R
    $ 500,000 GAIN ON LT DEBT
    $ 100,000
    $ 23,000 CASH TO SUPPLIER
    $ 40,430 COGS
    unts Payable - Inventory purchases INVTY
    unts Payable - Operating expenses A/P
    n and amortization are not included in COGS
    CASH FOR OPERATING EXP
    PREPAID
    m operating activities SUPPLIES (OPEX)
    ACCRUED LIAB
    WAGES

    CASH FOR INTEREST


    INT EXP

    CASH FOR TAX


    TAX EXPENSE

    Net cash provided by operating activiti


    m investing activities DIFF
    $ 12,000
    f fixed assets $ (78,000)
    ed in investing activities $ (66,000)
    m financing activities
    of long-term debt $ (65,000)
    $ (27,000)
    ed in financing activities $ (92,000)
    $ 812,350
    $ 12,430 SALES $ 812,350
    $ (8,600) COGS $ (500,000)
    GROSS INCOME $ 312,350
    OPEX $ 100,000
    $ (500,000) TAX $ 40,430
    $ 1,680 NET INCOME $ 171,920
    $ 3,000 $ 68,850
    $ 103,070

    $ (2,400)
    $ (100,000)

    $ (23,000)

    $ (40,430)
    $ 155,030
    $ 155,030
    $ -

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