Asked by Brandon Watson on Jul 15, 2024
Verified
The financial statements of Lowz Company appear below:
The following additional data were provided:
1. Dividends declared and paid were $35000.
2. During the year equipment was sold for $17000 cash. This equipment cost $28000 originally and had a book value of $17000 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.
Direct Method
A way of preparing the cash flow statement where actual cash inflows and outflows from operating activities are reported, as opposed to the indirect method.
Operating Expenses
The costs associated with the normal operations of a business, such as rent, utilities, and payroll, excluding cost of goods sold.
Dividends
Payments made by a corporation to its shareholder members, usually as a distribution of profits.
- Pinpoint and classify tasks associated with operating, investing, and financing functions.
- Assess the consequences of transactions on the movement of cash flows.
Verified Answer
SS
Learning Objectives
- Pinpoint and classify tasks associated with operating, investing, and financing functions.
- Assess the consequences of transactions on the movement of cash flows.