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Prepare a statement of cash flows for Lowz Company

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Prepare a statement of cash flows for Lowz Company aEx. 1 The income statement of Frank Company is shown below: FRANK COMPANY Income Statement For the Year Ended December 31, 2014 Sales $8,400,000 Cost of goods sold 5,400,000 Gross profit 3,000,000 Operating expenses Selling expenses $500,000 Administrative expense 700,000 Depreciation expense 90,000 Amortization expense 30,000 1,320,000 Net income $1,680,000 Additional information: 1. Accounts receivable increased $400,000 during the year. 2. Inventory increased $250,000 during the year. 3. Prepaid expenses increased $200,000 during the year. 4. Accounts payable to merchandise suppliers increased $100,000 during the year. 5. Accrued expenses payable increased $160,000 during the year. Instructions Prepare the operating activities section of the statement of cash flows for the year ended December 31, 2014, for Frank Company, using the direct method. aEx. 2 The financial statements of Lowz Company appear below: LOWZ COMPANY Comparative Balance Sheet December 31 2014 2013 Assets Cash $ 36,000 $ 23,000 Accounts receivable 25,000 34,000 Merchandise inventory 32,000 15,000 Property, plant, and equipment 50,000 78,000 Accumulated depreciation (21,000) (24,000) Total $122,000 $126,000 Liabilities and Stockholders’ Equity Accounts payable $ 18,000 $ 23,000 Income taxes payable 9,000 8,000 Bonds payable 8,000 33,000 Common stock 28,000 24,000 Retained earnings 59,000 38,000 Total $122,000 $126,000 LOWZ COMPANY Income Statement For the Year Ended December 31, 2014 Sales $400,000 Cost of goods sold 270,000 Gross profit 130,000 Operating expenses 45,000 Income from operations 85,000 Interest expense 5,000 Income before income taxes 80,000 Income tax expense 24,000 Net income $ 56,000 The following additional data were provided: 1. Dividends declared and paid were $35,000. 2. During the year, equipment was sold for $17,000 cash. This equipment cost $28,000 originally and had a book value of $17,000 at the time of sale. 3. All depreciation expense is in the operating expenses. 4. All sales and purchases are on account. 5. Accounts payable pertain to merchandise suppliers. 6. All operating expenses except for depreciation were paid in cash. Instructions Prepare a statement of cash flows for Lowz Company using the direct method. Business Management Assignment Help, Business Management Homework help, Business Management Study Help, Business Management Course Help

Prepare a statement of cash flows for Lowz Company

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