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Roo, Inc. reported the following data: Net income $118,000 Depreciation expense

ID: 2381775 • Letter: R

Question

Roo, Inc. reported the following data:

Net income

$118,000

Depreciation expense

15,000

Loss on disposal of equipment

11,000

Increase in accounts receivable

7,000

Decrease in accounts payable

(2,000)

Prepare the cash flows for operating activities under the indirect method as it would appear on the statement of cash flows.                                                               (6 points)

ANS:   

Net cash flow from operating activities

       

  

Net income

     

$118,000

     

Depreciation expense

     

15,000

     

Loss on disposal of equipment

     

11,000

     

Increase in accounts receivable

     

7,000

     

Decrease in accounts payable

     

(2,000)

  

Explanation / Answer

Net income = 118000

ADD:-Depreciation expense =15000

ADD:-Loss on disposal of equipment=11000

LESS:-Increase in accounts receivable = (7000)

LESS:-Decrease in accounts payable =(2000)

NET CASHFLOW GENERATED FROM OPERATING ACTIVITIES = 135000

Dr Jack
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