Question

Selected data (in thousands) derived from the income statement and balance sheet of National Beverage Co. for a recent year are as follows:

1 Income statement data:

2 Net income $49,311.00

3 Gain on disposal of property 1,188.00

4 Depreciation expense 11,580.00

5 Other items involving noncash expenses 1,383.00

6 Balance sheet data:

7 Increase in accounts receivable 1,746.00

8 Decrease in inventory 990.00

9 Increase in prepaid expenses 605.00

10 Decrease in accounts payable 710.00

11 Decrease in accrued and other current liabilities 995.00

Required:

a. Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method for National Beverage Corp. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Use the minus sign to indicate cash outflows, cash payments, decreases in cash and for any adjustments, if required.
b. Interpret your results in part (a).
Amount Descriptions
Amortization of intangible assets
Decrease in accounts payable
Decrease in accounts receivable
Decrease in accrued and other current liabilities
Decrease in inventory
Decrease in prepaid expenses
Depreciation
Gain on disposal of property
Increase in accounts payable
Increase in accrued and other current liabilities
Increase in accounts receivable
Increase in inventory
Increase in prepaid expenses
Losses on disposal of property
Net cash flow from operating activities
Net cash flow used for operating activities
Net income
Net loss
Other items involving noncash expenses

Answer 1

Answer and Explanation:

The preparation of the cash flow statement is presented below:

Cash flow from operating activities

Net income $49,311

Less: Gain on disposal of property -$1,188

Add: Depreciation expense $11,580

Add: Other items involving non-cash expenses $1,383

Less: Increase in accounts receivable -$1,746

Add: Decrease in inventory $990

Less: Increase in prepaid expenses -$605

Less: Decrease in accounts payable -$710

Less: Decrease in accrued and other current liabilities -995

Cash flow provided by operating activities $58,020

b.

Amortization of intangible assets : Added

Decrease in accounts payable : Decrease

Decrease in accounts receivable : Added

Decrease in accrued and other current liabilities : Decrease

Decrease in inventory : Added

Decrease in prepaid expenses : Added

Depreciation : Added

Gain on disposal of property : Decrease

Increase in accounts payable : Added

Increase in accrued and other current liabilities : Added

Increase in accounts receivable : Decrease

Increase in inventory : Decrease

Increase in prepaid expenses : Decrease

Losses on disposal of property: Added

Other items involving noncash expenses : added