Question

Suppose the income statement for Goggle Company reports $70 of net income, after deducting depreciation of $35. The company bought equipment costing $60 and obtained a long-term bank loan for $60. The company's comparative balance sheet, at December 31, indicates the following: Required: 1. Calculate the change in each balance sheet account, and indicate whether each account relates to operating, investing, and/or financing activities. (Decreases should be indicated with minus sign.) Current Year Previous Year 35 75 Cash $ Accounts Receivable 205 175 | 135 Change Type 170 Cash 100 Operating (125) Operating 50 Investing (35) Operating Inventory 260 560 Equipment Accumulated Depreciation 500 (45) 825 (80)| 995 Total $ 10 50 445 505 Wages Payable Long-Term Debt Contributed Capital Retained Earnings 40 Operating 60 Financing 0 70 10 360 10 430 995 Total | $ 825 $

Answer 1

$ 70 $ 35 $ 125 40 Cash flows from Operating Activties Net Income Adjustments to reconcile net income to net Cashflows from Operating activities Add: Depreciation Expenses Increase in Accounts Receivable Decrease in Inventory Increase in Wages Payable Net Cash flows from Operating activities - A Cash flows from Investing activities Purchase of Investment Sale of Plant Asset Net Cash flows from Investing activities - B Cash flows from Financing activities Issue of New Bonds Dividend paid in Cash Net Cash flows from Financing activities -C P.Y c.Y Change Type $ 35 $ 205 $ 170 Cash $ 75 $ 175 $ 100 Operating $ 260 $ 135 $ -125 Operating $ 500 $ 560 $ 60 Investing $ -45 $ -80 $ -35 Operating $ 825 $ 995 $ 10 $ 50 $ 40 Operating $ 445 $ 505 $ 60 Financing $ 10 $ 10 $ - Financing $ 360 $ 430 $ 70 Financing S 825 $ 995 Cash Accounts Receivable Inventory Equipment Accumulated Depreciation Total Wages Payable Long term debt Contributed Capital Retained Earnings Total 170 A A $ 170 Net Cash flow (A+B+C) Add: Opening Cash Balance Closing Cash Balance 35 A 205 A