1. A company\'s current-year Income Statement and selected Balance Sheet data at

Question

1. A company's current-year Income Statement and selected Balance Sheet data at December 31 of the current and prior years follow. In good order and form, prepare the operating activities section of the Statement of Cash Flows, using the indirect method. Income Statement For the Current Year Ended December 31, Sales Revenue Cost of Goods Sold Gross Profit Operating Expenses $150,000 75,000 75,000 Depreciation Expense Salaries Expense Interest Expense 30,000 20,000 5,000 Net Income 20,00 Selected Balance Sheet Accounts At December 31 Accounts Receivable Inventory Accounts Payable Salaries Payable Interest Payable Current Yr Prior Yr $12,000 8,000 11,000 4,000 2,000 $14,000 5, 000 7,000 9,000 3,000 Cash Flows from Operating Activities Net Income Adjustments to Reconcile Net Cash Provided by Operating Activities Depreciation Expense Increase in Accounts Receivable Decrease in Inventory Non-Cash Items Changes in Current Assets & Current Liabilities

Explanation / Answer

Solution 1:

Solution 2:

Solution 3:

Statement of Cash Flows (Partial) For year ended December 31 Particulars Details Amount Cash Flow from Operating Activities: Net Income $20,000.00 Adjustments to reconcile net income to net cash provided by operations: Depreciation Expense $30,000.00 Increase in accounts receivables ($14,000 - $12,000) -$2,000.00 Decrease in inventory ($8,000 - $5,000) $3,000.00 Decrease in accounts payable ($11,000 - $7,000) -$4,000.00 Increase in Salaries payable ($9,000 - 4,000) $5,000.00 Increase in Interest payable ($3,000 - $2,000) $1,000.00 Net Cash provided by operating activities $53,000.00

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