. (TCO F) Cash flows from operating activities (indirect and direct methods). Pr
ID: 2361934 • Letter: #
Question
. (TCO F) Cash flows from operating activities (indirect and direct methods). Presented below is the income statement of Angola, Inc. Sales $324,000 Cost of goods sold $214,000 Gross profit $110,000 Operating expenses $67,000 Income before income taxes $43,000 Income taxes $17,200 Net income $25,800 In addition, the following information related to net changes in working capital is presented. Debit Credit Cash $10,600 Accounts receivable $2,400 Inventories $3,600 Salaries payable (operating expenses) $12,000 Accounts payable $15,000 Income taxes payable $1,400 Depreciation expense for the year was $14,700 Deferred tax liability account increased $1,800 Required: Prepare a schedule computing the net cash flow from operating activities that would be shown on a statement of cash flows -(a) using the indirect method. -(b) using the direct method. (Points : 40)Explanation / Answer
Cash Flow From Operating Activities Net Income for the year 42,500.00 Add: Depreciation Expenses : Machinery - 4125 Building -4500 8,625.00 Loss on Sale of Machinery 800.00 Increase in Accounts Payables 10250 Increase in Accrued Payables 750.00 Less: Increase in Accounts Receivable(net) (9,750.00) Increase in Inventory (6,000.00) Gain on sale of investments (3,750.00) Cash Flow From Operating Activities 925.00 Cash Flow From Financing Activities Purchase of Available securities (8,750.00)
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