Exercise 23-4 The income statement of Metlock Company is shown below METLOCK COM

Question

Exercise 23-4 The income statement of Metlock Company is shown below METLOCK COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2017 Sales revenue $6,930,000 Cost of goods sold Beginning inventory Purchases Goods available for sale Ending inventory Cost of goods sold $1,890,000 4,410,000 6,300,000 1,590,000 4,710,000 2,220,000 Gross profit Operating expenses 450,000 700,000 Selling expenses 1,150,000 $1,070,000 Administrative expenses Net income Additional information: 1. Accounts receivable decreased $370,000 during the year 2. Prepaid expenses increased $160,000 during the year 3. Accounts payable to suppliers of merchandise decreased $290,000 during the year 4. Accrued expenses payable decreased $90,000 during the year 5. Administrative expenses include depreciation expense of $50,000

Explanation / Answer

METLOCK COMPANY

Statement of Cash Flows(partial)

Net Income 1,070,000 ADD : Depreciation 50,000 Operating cash flows 1,120,000 ADD : Decrease in Current Assets Acconts Receivable 370,000 LESS : Increase in Current Assets Prepaid expenses (160,000) LESS : Decrease in Current Liabilities Accounts Payable (290,000) Accrued expenses payable (90,000) Cash flows from Operating Activities 950,000

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