TakeHomeFall2011Final

TakeHomeFall2011Final - Name:...

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Unformatted text preview: Name: ___________________________________ Date: ______________ Intermediate II Take Home Final Page 1 1. Cash flows from operating activities (indirect and direct methods). Presented below is the income statement of Cowan, Inc.: Sales $380,000 Cost of goods sold 225,000 Gross profit $155,000 Operating expenses 85,000 Income before income taxes 70,000 Income taxes 28,000 Net income $ 42,000 In addition, the following information related to net changes in working capital is presented: Debit Credit Cash $12,000 Trade accounts receivable 15,000 Inventories $19,400 Salaries payable (operating expenses) 8,000 Trade accounts payable 12,000 Income tax payable 3,000 The company also indicates that depreciation expense for the year was $16,700 and that the deferred tax liability account increased $2,600. Instructions Prepare a schedule computing the net cash flow from operating activities that would be shown on a statement of cash flows: (a) using the indirect method. (b) using the direct method. Intermediate II Take Home Final 1. Cash flows from operating activities (indirect and direct methods). Presented below is the income statement of Cowan, Inc.: Sales $380,000 Cost of goods sold 225,000 Gross profit $155,000 Operating expenses 85,000 Income before income taxes 70,000 Income taxes 28,000 Net income $ 42,000 In addition, the following information related to net changes in working capital is presented: Debit Credit Cash $12,000 Trade accounts receivable 15,000 Inventories $19,400 Salaries payable (operating expenses) 8,000 Trade accounts payable 12,000 Income tax payable 3,000 The company also indicates that depreciation expense for the year was $16,700 and that the deferred tax liability account increased $2,600....
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This note was uploaded on 02/21/2012 for the course ACT 492 taught by Professor Ngo during the Fall '11 term at Colorado.

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TakeHomeFall2011Final - Name:...

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