Question

A comparative balance sheet and income statement is shown for Cruz, Inc.

CRUZ, INC. Comparative Balance Sheets December 31, 2017
		2017				2016
Assets
Cash	$	82,800			$	20,600
Accounts receivable, net		35,500				43,700
Inventory		74,300				82,000
Prepaid expenses		4,600				3,700
Total current assets		197,200				150,000
Furniture		92,800				104,800
Accum. depreciation—Furniture		(14,400	)			(8,000	)
Total assets	$	275,600			$	246,800
Liabilities and Equity
Accounts payable	$	13,000			$	18,200
Wages payable		7,700				4,300
Income taxes payable		1,300				2,400
Total current liabilities		22,000				24,900
Notes payable (long-term)		26,800				63,700
Total liabilities		48,800				88,600
Equity
Common stock, $5 par value		198,800				155,300
Retained earnings		28,000				2,900
Total liabilities and equity	$	275,600			$	246,800

   

CRUZ, INC. Income Statement For Year Ended December 31, 2017
Sales				$	422,500
Cost of goods sold					271,900
Gross profit					150,600
Operating expenses
Depreciation expense	$	32,500
Other expenses		77,100			109,600
Income before taxes					41,000
Income taxes expense					14,900
Net income				$	26,100

QS 16-11 Indirect: Computing cash from operations LO P2

Required:
Use the indirect method to prepare the cash provided or used from operating activities section only of the statement of cash flows for this company.

Answer 1

CRUZ, INC. Cash flows from Operating Activities: Net Income Adjustments for : Depreciation Operating cashflow before changes in working capital Chnages in Working Capital Decrease in Accounts Receivables Decrease in inventory Increase in Prepaid expenses Decrease in Accounts payable Increase in wages payable Decrease in Income taxes payable Net Cash from operating activities Amount Amount S 26,100 S 32,500 S 58,600 8,200 7,700 (900) (5,200) 3,400 S (1,100 S 12,100 S 70,700

Working Notes Satement of change in current assets & current liabilities (except cash & cash equivalents) Particulars 2017 Change 2016 Accounts Receivable 43,700 35,500 8,200 82,000 $ 3,700 $ Inventory Prepaid expenses 7,700 74,300 4,600 13,000 5,200 7,700 $ 1,300 $ 900 Accounts Payable 18,200 Wages payable 4,300 3,400 Income taxes payable 2,400 1,100