Budget Auto Parts Company uses the indirect method to prepare the statement of c

Question

Budget Auto Parts Company uses the indirect method to prepare the statement of cash flows. Refer to the following income statement:

                                     Budget Company

                                    Income Statement

                          Year Ended December 31, 2017

Sales Revenue                                       $360,000

Interest Revenue                                        1,500

Gain on Sale of Plant Assets                      6,000

Total Revenues and Gains                                               $367,500

Cost of Goods Sold                                  165,000

Salary Expense                                         67,500

Depreciation Expense                              18,000

Other Operating Expenses                        34,500

Interest Expense                                         1,500

Income Tax Expense                                  7,500

Total Expenses                                                                  294,000

Net Income (Loss)                                                              $73,500

Additional information provided by the company includes the following:

Current assets other than cash increase by $36,000.

Current liabilities decrease by $1,500.

Prepare the operating activities section of the statement of cash flows.

Explanation / Answer

Cash FLow from operations (Indirect Method)

Column1 Particulars Amount Net Income 73,500.00 Less: Gain On sale of plant     6,000.00 Add: Depreciation 18,000.00 Add: Interest Expense     1,500.00 Less: Increase in Current Assets 36,000.00 Less: Decrease in Current Liabilities     1,500.00 Cash Flow From Operations 49,500.00

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