The income statement of Pronghorn Company is shown below. PRONGHORN COMPANY INCO
ID: 2514731 • Letter: T
Question
The income statement of Pronghorn Company is shown below.
PRONGHORN COMPANY
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2017
$6,250,000
$1,990,000
4,470,000
6,460,000
1,700,000
4,760,000
1,490,000
410,000
700,000
1,110,000
$380,000
Additional information:
Prepare the operating activities section of the statement of cash flows for the year ended December 31, 2017, for Pronghorn Company, using the indirect method.
PRONGHORN COMPANY
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2017
$6,250,000
Cost of goods sold Beginning inventory$1,990,000
Purchases4,470,000
Goods available for sale6,460,000
Ending inventory1,700,000
Cost of goods sold4,760,000
Gross profit1,490,000
Operating expenses Selling expenses410,000
Administrative expenses700,000
1,110,000
Net income$380,000
Explanation / Answer
Answer:
Pronghorn Company,
Cash flow statement (partial)
Cash Flow from operating activity
net income
380,000
Adjustment to reconcile the net income
Depreciation Expanses
60,000
Decrease in account receivable
280,000
Increase in prepaid Expanses
-160,000
Decrease in account payable
-250,000
Accrued expenses payable decreased
-110,000
-180,000
Net cash caused by operating activity
200,000
Pronghorn Company,
Cash flow statement (partial)
Cash Flow from operating activity
net income
380,000
Adjustment to reconcile the net income
Depreciation Expanses
60,000
Decrease in account receivable
280,000
Increase in prepaid Expanses
-160,000
Decrease in account payable
-250,000
Accrued expenses payable decreased
-110,000
-180,000
Net cash caused by operating activity
200,000
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