Homework SourseThe controller of Infinity Stone Corporation has provided yo
The controller of Infinity Stone Corporation has provided you with the following information:
Infinity Stone Corporation
Income Statement
For the Year Ended December 31, 2018
Net sales
$620,000
Operating expenses
410,000
Income from operations
210,000
Other revenues and expenses
Gain on sale of equipment $30,000
Interest expense 8,000
$22,000
Income before income taxes
232,000
Net income
Infinity Stone Corporation
Comparative Account Information
Relating to Operations
For the Year Ended December 31, 2018
2018 2017
Accounts receivable $56,000 $40,000
Prepaid insurance 5,000 6,000
Accounts payable 59,000 47,000
Interest payable 600 1,500
Income taxes payable 4,200 6,000
Unearned revenue 20,000 14,000
Required
1. Prepare a statement of cash flows (for operating activities only) for the year ended December 31, 2018, using the indirect method.
| Net sales | $620,000 |
| Operating expenses | 410,000 |
| Income from operations | 210,000 |
| Other revenues and expenses | |
| Gain on sale of equipment $30,000 | |
| Interest expense 8,000 | |
| $22,000 | |
| Income before income taxes | 232,000 |
Solution
Note: Taxes and net income figures is missing in this question. It was assumed that provision for income tax for 2018 is $6,000 and income tax of 2017 amounting $4,200 was paid in 2018.
| Infinity Stone Corporation - Cash flow from operating activities -31.12.2018 | ||
| Particulars | Details | Amount |
| Cash flow from Operating Activites: | ||
| Income from operations | $210,000.00 | |
| Adjustment to reconcile net income to net cash provided by operating activities: | ||
| Increase in accounts receivables | -$16,000.00 | |
| Increase in prepaid insurance | -$1,000.00 | |
| Decrease in unearned revenue | -$6,000.00 | |
| Decrease in accounts payable | -$12,000.00 | |
| Income tax paid | -$4,200.00 | |
| Net cash provided by operating activities | $170,800.00 |
