Bagel Inc. reported net income of $105,000 for the year ended December 31, 2014. The following items were
included on Bagel's balance sheets at December 31, 2014 and 2013:
Bagel uses the indirect method to prepare its statement of cash flows. Bagel does not have any other current assets or current liabilities and did not enter into any investing or financing activities during 2014.
REQUIRED:
1. Prepare Bagel's 2014 statement of cash flows.
2. Draft a brief memo to the owner to explain why cash decreased during a profitable year.

Question

Bagel Inc. reported net income of $105,000 for the year ended December 31, 2014. The following items were
included on Bagel's balance sheets at December 31, 2014 and 2013:
  Bagel uses the indirect method to prepare its statement of cash flows. Bagel does not have any other current assets or current liabilities and did not enter into any investing or financing activities during 2014.
REQUIRED:
1. Prepare Bagel's 2014 statement of cash flows.
2. Draft a brief memo to the owner to explain why cash decreased during a profitable year.

Quizplus · Accepted Answer

The Answer of Bagel Inc. reported net income of $105,000 for the year ended December 31, 2014. The following items were
included on Bagel's balance sheets at December 31, 2014 and 2013:
  Bagel uses the indirect method to prepare its statement of cash flows. Bagel does not have any other current assets or current liabilities and did not enter into any investing or financing activities during 2014.
REQUIRED:
1. Prepare Bagel's 2014 statement of cash flows.
2. Draft a brief memo to the owner to explain why cash decreased during a profitable year.

Bagel Inc Reported Net Income of $105,000 for the Year Ended