value 15.00 points The two independent cases are listed below Case A Case B Year

Question

value 15.00 points The two independent cases are listed below Case A Case B Year 2 Year 1 Year 2 Year 1 $11,800 $12,400 $21,800 $22,000 Sales Revenue Cost of Goods Sold Gross Profit Depreciation Expense Salaries and Wages Expense ,700 1,200 5,800 5,800 Net Income 6,7209,500 12,720 13,910 5,0802,900 9,0808,090 1,200 1,200 1,900 1,900 2,180 500 1,380 390 Accounts Receivable Inventory Accounts Payable Salaries and Wages Payable 480 580 740 1,0401,280 340 790 880 830 770 880 240 640 880 970 330 Show the operating activities section of the statement of cash flows for year 2 using the indirect method (Amounts to be deducted should be indicated with a minus sign.) Case A Case B Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities Changes in Assets and Liabilities 0

Explanation / Answer

STATEMENT OF CASH FLOWS FOR YEAR 2

(*)Increase in current liabilities and decrease in current assets are added back and Decrease in current liabilities and increase in current assets are subtracted to arrive at Net Cash provided by Operating activities.

PARTICULARS CASE A CASE B Net Income 2,180 1,380 Adjustments to reconcile net income to net cash provided by operating activities Add : Depreciation 1,200 1,900 Operating profit before Working Capital Changes 3,380 3,280 Changes in assets and liabilities Add: Increase in accounts payable 140 --------- Decrease in inventory --------- 110 Decrease in accounts receivable 140 --------- Less : Decrease in salaries and wages payable (240) (90) Decrease in accounts payable --------- (90) Increase in inventory (210) --------- Increase in accounts receivables --------- (190)

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