PA12-2 Computing Cash Flows from Operating A The income statement and selected b

Question

PA12-2 Computing Cash Flows from Operating A The income statement and selected balance sheet information fo ended December 31 are presented below. Income Statement Sales Revenue Expenses: $49,600 Cost of Goods Sold Depreciation Expense Salaries and Wages Expense Rent Expense Insurance Expense Interest Expense Utilities Expense 21,500 2,100 9,100 4,600 1,950 1,850 1,450 Net Income 7,050 Selected Balance Sheet Accounts Ending Beginning Balances Balances Accounts Receivable Inventory Accounts Payable Prepaid Rent Prepaid Insurance Salaries and Wages Payable Utilities Payable S 565 S 590 765 470 21 30 59 16 980 425 27 26 98 Required: Prepare the cash flows from operating activities section of the staten method. (Amounts to be deducted should be indicated with a minu

Explanation / Answer

Net cash flow from operating activity under statement of cash flow :

Cash flow from operating activity Net income 7050 Adjustment to reconcile net income Depreciation exp 2100 Decrease account receivable 25 Increase inventory (215) Decrease account payable (45) Increase prepaid rent (6) Decrease prepaid insurance 4 Increase salary and wages payable 39 Increase utilities payable 6 1908 Net cash flow from operating activities 8958

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