Question

Cash flows from operating activities for both the indirect and direct methods are presented for Electronic Transformations. Cash Flows from Operating Activities (Indirect method) Net income $ 35,700 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation expense 8,700 Increase in accounts receivable (12,700 ) Increase in accounts payable 7,700 Increase in income tax payable 5,700 Net cash flows from operating activities $ 45,100 Cash Flows from Operating Activities (Direct method) Cash received from customers $ 81,500 Cash paid for operating expenses (25,700 ) Cash paid for income taxes (10,700 ) Net cash flows from operating activities $ 45,100 Required: Complete the following income statement for Electronic Transformations. Assume all accounts payable are to suppliers.

Answer 1

Answer:

Sales revenue               94,200

supplies expense        (33,400 )

depreciation expense (   8,700 )

income tax expense   ( 16,400 )  

Net income                    35,700

Explanation:

cash from customer 81,500

plus 12,700 not collected (increase in A/R)

sales revenue = 94,200

cash paid for operating expense 25,700

increase in account payable           7,700

we pay 25,700 expenses and also we delay payment of additional 7,700 accrued expenses:

supplies expense 33,400

paid for income tax payable 10,700

increase in income tax payable  5,700

same logic as with account payable

income tax expense 16,400