Question:
“Be careful with that coffee!†Your roommate is staring in disbelief at the papers in front of her. “This was my contribution to our team project,†she moaned. “When you spilled your coffee, it splashed on this page. Now I can’t recognize some of these numbers, and Craig has my source documents.â€
Knowing how important this afternoon’s presentation is to your roommate, you’re eager to see what can be done. “Let me see that,†you offer. “I think we can figure this out.†The statement of cash flows and income statement are intact. The reconciliation schedule and the comparative balance sheets are coffee casualties.
Required:
1. Determine the missing amounts.
2. Reconstruct the reconciliation of net income to cash flows from operating activities (operating cash flows using the indirect method).
Transcribed Image Text:
DISTINCTIVE INDUSTRIES Statement of Cash Flows For the Year Ended December 31, 2018 ($ in millions) Cash Flows from Operating Activities: Collections from customers $213 Payment to suppliers Payment of general & administrative expenses Payment of income taxes (90) (54) (27) Net cash flows from operating activities $ 42 Cash Flows from Investing Activities: Sale of equipment 120 Cash Flows from Financing Activities: Issuance of common stock 30 Payment of dividends (9) Net cash flows from financing activities 21 Net increase in cash $183 Reconciliation of net income to cash flows from operating activities: Net income $ 84 Adjustments for noncash items: Depreciation expense Net cash flows from operating activities O O O O O O DISTINCTIVE INDUSTRIES Income Statement For the Year Ended December 31, 2018 ($ in millions) Sales revenue $240 Cost of goods sold 96 Gross profit Operating expenses: 144 General and administrative $54 Depreciation 30 Total operating expenses 84 Operating income 60 Other income: Gain on sale of equipment 45 Income before income taxes 105 Income tax expense 21 Net income $ 84 DISTINCTIVE INDUSTRIES Comparative Balance Sheets At December 31 ($ in millions) 2018 2017 Assets: $ 360 Cash Accounts receivable (net) 252 Inventory Property, plant, and equipment Less: Accumulated depreciation 180 450 600 (120) Total assets Liabilities and shareholders' equity: Accounts payable General and administrative expenses payable Income taxes payable $ 120 $ 90 27 27 66 Common stock 720 690 Retained earnings 141 Total liabilities and shareholders' equity
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