The results of operations for last year are shown, along with selected balance sheet data. From the info, determining the amount of net cash flows provided from operations, using the direct method. After completing, show how the amount of net cash flows from operating activities would be calculated using the indirect method.
Sales revenue $510,000
Cost of goods sold 320,000
Gross Margin $190,00
Operating expenses
Wages expense 75,000
Utilities expense 2,500
Rent expense 35,400
Insurance expense 6,900 $119,800
Net income 70,200
Beginning of year End of year
Accounts receivable (net) $42,000 $39,000
Inventory 38,000 39,000
Prepaid Insurance 2,200 1,800
Accounts payable 16,000 19,000
Wages payable 10,000 8,800
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SOLUTION PREVIEW
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Cash flow from operating activities (indirect method) :
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Particulars
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Amount
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Amount
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Net Income
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70,200
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Adjustments for
working capital changes:
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Add decrease in
Accounts receivables
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3,000
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Less increase in
Inventory
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-1,000
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Add decrease in
prepaid Insurance
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400
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