Financial & Managerial Accounting 17th Edition by Jan Williams ,Susan Haka,Mark Bettner,Joseph Carcello

تمرين 22

Reporting Operating Cash Flows by the Indirect Method
Using the information presented in Problem 13.4B, prepare a partial statement of cash flows for the current year, showing the computation of net cash flows from operating activities using the indirect method. Explain why the increase in accounts receivable over the year was subtracted from net income in computing the cash flows from operating activities.
Problem 13.4B
Reporting Operating Cash Flows by the Direct Method
The following income statement and selected balance sheet account data are available for Royce Interiors, Inc., at December 31, 2015:

Additional Information
1. Dividend revenue is recognized on the cash basis. All other income statement amounts are recognized on the accrual basis.
2. Operating expenses include depreciation expense of $49,000.
Instructions
a. Prepare a partial statement of cash flows, including only the operating activities section of the statement and using the direct method. Place brackets around numbers representing cash payments. Show supporting computations for the following:
1. Cash received from customers.
2. Interest and dividends received.
3. Cash paid to suppliers and employees.
4. Interest paid.
5. Income taxes paid.
b. Management of Royce Interiors, Inc., is exploring ways to increase the cash flows from operations. One way that cash flows could be increased is through more aggressive collection of receivables. Assuming that management has already taken all the steps possible to increase revenue and reduce expenses, describe two other ways that cash flows from operations could be increased.