Comparative Balance Sheets and the Income Statements for Ellis Corporation

question 21

Essay

Comparative balance sheets and the income statements for Ellis Corporation are presented below: The following additional information is available for the year:
* During the year, the company sold long-term investments for $35,500 that had been purchased for $38,000.
* The company did not sell any property, plant, and equipment during the year or repurchase any of its own common stock.
* All sales were on credit.
* The company paid a cash dividend of $25,000.
* The company paid cash to retire $15,000 of bonds payable.

Required:
a.Using the indirect method, determine the net cash provided by (used in)operating activities.
b.Using the direct method, determine the net cash provided by (used in)operating activities.
c.Using the net cash provided by (used in)operating activities amount from either part a or b, prepare a statement of cash flows.

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Definitions:

Accounts Payable

Liabilities owed by a business to its suppliers or vendors for goods or services received that have not yet been paid for.

Service Revenue

Income earned by a company for the provision of services, distinguished from revenue generated from the sale of goods.

Adjusting Entries

Records made in the journal at the period's end to correctly allocate income and expenditure to the period of their occurrence.

Adjusted Trial Balance

A list of all the accounts and their balances after adjustments are made for revenues and expenses, used to prepare financial statements.