Interrelationships among the Income Statement, Balance Sheet, and Statement of Cash Flow Frontera Corporation reported the following income statement and comparative balance sheet for the year ended December 31, 2004.
|
Income Statement (for the Year Ended December 31, 2004) |
|
|
Sales revenue |
$6,930 |
|
Cost of goods sold |
3,660 |
|
Gross profit on sales |
3,270 |
|
Operating expenses: |
|
|
Wages |
855 |
|
Depreciation |
102 |
|
Rent |
546 |
|
Advertising |
1,224 |
|
Operating income |
543 |
|
Other revenues and expenses: |
|
|
Interest revenue |
84 |
|
Interest expense |
24 |
|
Income before taxes |
603 |
|
Income tax expense |
210 |
|
Net income |
$393 |
|
Balance Sheet (at December 31) |
2004 |
2003 |
|
Assets: |
||
|
Cash |
$482 |
$318 |
|
Accounts receivable |
246 |
189 |
|
Inventory |
471 |
483 |
|
Prepaid advertising |
54 |
21 |
|
Total current assets |
1,253 |
1,011 |
|
Buildings and equipment |
2,811 |
1,974 |
|
Accumulated depreciation |
922 |
820 |
|
Land |
350 |
300 |
|
Investments, long term |
250 |
400 |
|
Total assets |
$3,742 |
$2,865 |
|
Liabilities and stockholders’ equity: |
||
|
Rent payable |
$450 |
$478 |
|
Wages payable |
32 |
24 |
|
Total current liabilities |
482 |
502 |
|
Notes payable, long term |
1,150 |
750 |
|
Common stock |
1,400 |
1,100 |
|
Retained earnings |
710 |
513 |
|
Total liabilities and equity |
$3,742 |
$2,865 |
Frontera Corporation used the indirect format to prepare the statement of cash flows, but it has been misplaced and is not available.
Required Use your knowledge of financial statements to answer each of the questions that follow. For each item you list as part of your answer, describe fully why the item appears on the statement of cash flows.
A. Which line items from the income statement will also be found in the operating activities section of the statement of cash flows?
B. Which line items from the balance sheet contain information that will be reflected in the operating activities section?
C. Which line items from the income statement will also be found in the investing activities section?
D. Which line items from the balance sheet contain information that will be reflected in the investing activities section?
E. Which line items from the income statement will also be found in the financing activities section?
F. Which line items from the balance sheet contain information that will be reflected in the financing activities section?