The following information is available for XYZ Company: January 1, 2003 December
ID: 2379508 • Letter: T
Question
The following information is available for XYZ Company: January 1, 2003 December 31, 2003 ASSETS Cash $25,000 $30,000 Accounts receivable 80,000 74,000 Supplies 7,000 10,000 Land 69,000 57,000 Equipment 20,000 20,000 Accumulated depreciation <6,000> <8,000> LIABILITIES + EQUITY Accounts payable $14,000 $19,000 Short-term notes payable 52,000 17,000 Salaries payable 7,000 1,000 Common stock 40,000 50,000 Retained earnings 82,000 96,000 During 2003, XYZ Company reported a net income of $26,000, recorded depreciation expense
of $2,000, and sold land costing $12,000 for $20,000 cash. Using the indirect method, calculate the net cash flow from operating activities for 2003.
If your answer is negative, place a minus sign in front of your answer with no spaces in
between (e.g., -1234). Do not use decimals in your answer.
Explanation / Answer
Depreciation = 8000-6000 =$2000
Decrease in accounts receivalble = -74,000+80000 =$6000
Decrease in inventory = -10000+7000 =-$3000
Increase in account payable = -14000 +19000 =$5000
Increase in short term note payable =17000-52000 =-$35000
Increase in Salaries payable = 1,000-7000= -6000
Non-Operating Gains = 20000 -12000 = 8000
Net income =26000
=-$13000
Net Income + Non-Cash Expenses: (Depreciation, Depletion & Amortization Expense) + Non-Operating Losses: (Loss on Sale of Non-Current Assets) ? Non-Operating Gains: (Gain on Sale of Non-Current Assets) + Decrease in Current Assets: (Accounts Receivable, Prepaid Expenses, Inventory etc.) ? Increase in Current Assets + Increase in Current Liabilities: (Accounts Payable, Accrued Liabilities, Income Tax Payable etc.) ? Decrease in Current Liabilities = Net Cash Flow from Operating Activities
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