Question M4-26 Lliul and amounts by which each of the following accounts changed

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Question M4-26

Lliul and amounts by which each of the following accounts changed during the year 1. Accounts receivable 2. Merchandise inventory 3. Accounts payable Using your results above, prepare the operating activities section of the statement of cash flows using the indirect format. d. M4-26. Calculating Net Cash Flow from Operating Activities (Indirect Method) LO3 The following information was obtained from Galena Company's comparative balance sheets Assume that Galena Company's 2016 income statement showed depreciation expense of $8,000, a gain on sale of investments of $9,000, and net income of $45,000. Calculate the net cash flow from operating activities using the indirect method. MBC Dec. 31, 2016 Dec. 31, 2015 $19,000 44,000 55,000 6,000 21,000 150,000 40,000 24,000 4,000 121,000 106,000 $9,000 35,000 49,000 8,000 34,000 106,000 32,000 20,000 6,000 92,000 91,000 Cash. Accounts receivable. .. Inventory. Prepaid rent Long-term investments Accumulated depreciation . .. Income tax payable Common stock. Retained earnings. Reconciling Net Income and Cash Flow from Operations Using FSET For fiscal year 2016, Riffe Enterprises had the following summary information available concern ing LO2, 3 its operating activities. The company had no investing or financing activities this year

Explanation / Answer

Particulars Amount Net Income 45000 Add: Depreciation expense 8000 Less: Gain on sale of investment -9000 Add/Less Working capital changes: Increase in Accounts Receivable -9000 Increase in Inventory -6000 Decrease in Pre Paid Rent 2000 Increase in Accounts Payable 4000 Decrease in Income Tax Payable -2000 Cash Flow From Operating Activities 33000

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