Prepare the operating section of the statement of cash flows under the indirect method.


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Prepare the operating section of the statement of cash flows under the indirect method. 1 answer below » Preparing the four financial statements The December 31, 2011, balance sheet for Morrison Home Services is summarized below. Assets Liabilities and Shareholders” Equity Cash $10,000 liabilities $ 6000 Receivables 4,000 Contributed capital 10000 Long-term assets 10,000 Retained earnings 8000 Total liabilities and Total assets $24000 shareholders” equity $24000 During January of 2012, the following transactions were entered into: Services were performed for $7,000 cash. $3,000 View complete question » Preparing the four financial statements The December 31, 2011, balance sheet for Morrison Home Services is summarized below. Assets Liabilities and Shareholders” Equity Cash $10,000 liabilities $ 6000 Receivables 4,000 Contributed capital 10000 Long-term assets 10,000 Retained earnings 8000 Total liabilities and Total assets $24000 shareholders” equity $24000 During January of 2012, the following transactions were entered into: Services were performed for $7,000 cash. $3,000 cash was received from customers on outstanding accounts receivable. $3,000 cash was paid for outstanding liabilities. Long-term assets were purchased in exchange for a $6,000 note payable. Expenses of $4,000 were paid in cash. A dividend of $800 was issued to the owners. REQUIRED: a. Provide a journal entry for each transaction. b. Treat each transaction independently and describe how each would affect the ratios of current assets divided by current liabilities, net income divided by shareholders” equity, and total liabilities divided by shareholders” equity; and Morrison”s current ratio, return on equity, and debt/equity ratio, respectively. c. Prepare the income statement, statement of shareholders” equity, the January 31 balance sheet, and the statement of cash flows (direct method) for January. d. (Appendix 4A) Prepare the operating section of the statement of cash flows under the indirect method. View less » Jun 11 2014 04:05 PM

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