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1.) Use the following income statement and information about selected current assets and current liabilities to calculate the net cash provided or used by operating activities using the direct method.style="font-size: medium; ">
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Peters Companystyle="font-size: medium; ">
Income Statementstyle="font-size: medium; ">
For Year Ended December 31, 2011style="font-size: medium; ">
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Sales.................................. $180,000style="font-size: medium; ">
Cost of goods sold......... 104,000style="font-size: medium; ">
Gross Profit from sales.... $ 76,000style="font-size: medium; ">
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Operating expenses:style="font-size: medium; ">
Salaries and wages expense $25,000style="font-size: medium; ">
Depreciation expense............. 5,000
Rent expense........................... 7,200
Interest expense....................... 1,900 39,100
Income from operations............ $36,900
Gain on sale of land ................. 2,000
Net Income................................. $38,900
Selected beginning and ending balances of current asset and current liability accounts, all of which relate to operating activities, are as follows:
Balance
Dec. 31, 2011 Dec 31, 2010
Accounts Receivable............................. $27,600 $24,000
Merchandise inventory........................... 18,200 20,000
Prepaid rent.......................................... 550 400
Accounts payable................................. 27,100 31,000
Salaries and wages payable.................. 10,400 9,000
Interest payable................................... 300 250
Use the following income statement and information about selected current assets and current liabilities to calculate the net cash provided or used by operating activities using the direct method.Explanation / Answer
net income 38900
add:depreciation 5000
less increase in account receivable -3600
prepaid rent -150
Accounts payable -3900
ADD:
inventory 1800
salary and wages 1400
interest payable 50
cash from operating activity 39500
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