Question

Exercise 4-21 (Static) Statement of cash flows; direct method [LO4-8]

Presented below is the 2021 income statement and comparative balance sheet information for Tiger Enterprises.

TIGER ENTERPRISES
Income Statement
For the Year Ended December 31, 2021
($ in thousands)
Sales revenue								$	7,000
Operating expenses:
Cost of goods sold		$	3,360
Depreciation expense			240
Insurance expense			100
General and administrative expense			1,800
Total operating expenses									5,500
Income before income taxes									1,500
Income tax expense									(600	)
Net income								$	900
Balance Sheet Information ($ in thousands)	Dec. 31,2021						Dec. 31, 2020
Assets:
Cash		$	300					$	200
Accounts receivable			750						830
Inventory			640						600
Prepaid insurance			50						20
Equipment			2,100						1,800
Less: Accumulated depreciation			(840	)					(600	)
Total assets		$	3,000					$	2,850
Liabilities and Shareholders' Equity:
Accounts payable		$	300					$	360
Accrued liabilities (for general & administrative expense)			300						400
Income taxes payable			200						150
Notes payable (due 12/31/2022)			800						600
Common stock			900						800
Retained earnings			500						540
Total liabilities and shareholders' equity		$	3,000					$	2,850

Required:
Prepare the cash flows from operating activities section of Tiger’s 2021 statement of cash flows using the direct method. Assume that all purchases and sales of inventory are on account, and that there are no anticipated bad debts for accounts receivable. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands.)

Statement of Cash Flows
For the Year Ended December 31, 2021
($ in thousands)
Cash flows from operating activities:      
Cash received from customersselected answer correct   7,080selected answer correct  
Cash paid for merchandiseselected answer correct   not attempted  
Cash paid for income taxesselected answer correct   not attempted  
Cash paid for insuranceselected answer correct   not attempted  
Cash paid for general and administrative expensesselected answer correct   not attempted  
not attempted   not attempted  
Net cash flows from operating activities       $7,0800

Answer 1

$ 7,080 $ $ 6,040 1,040 TIGER ENTERPRISES Statement of Cash Flows For the Year Ended December 31,2021 (S in thousands) Cash Flows from operating activities: Cash Received from Customers Cash paid for merchandise $ 3,460 Cash paid for general and administrative expenses $ 1,900 Cash paid for insurance $ 130 Cash paid for income taxes S 550 Net Cash flow from operating activities Note: 1 Cash Received from Customers Beginning Balance of Accounts Receivables $ 830 Add: sales revenue $ 7,000 $ 7,830 Less: Closing Balance of Accounts Receivables $ 750 $ 7,080 2 Cash paid for merchandise Cost of Goods sold $ 3,360 Add : Beginning accounts payable S 360 $ 3,720 Less: Ending accounts payable $ 300

3,420 640 600 3,460 $ Add: Closig Inventory $ Less: Opening inventory $ $ 3 Cash paid for general and administrative expenses Administrative Expenses Add: Opening Balance of Accured liabilities $ $ Less: Closing Balance of Accured Liabilities $ $ 4 Cash paid for insurance Closing Balance of Prepaid Insurance $ Add: Insurance Expense 1,800 400 2,200 300 1,900 50 100 150 20 130 Less: Opening Balance of Prepaid Insurance S 5 Cash paid for income taxes Opening Balance of Income tax payable add: Income Tax Expenses $ 150 600 750 200 550 Less: Closing Balance of Income Tax payable $ $