TOBY ZED COMPANY Income Statement For the Year Ended November 30, 2012 Sales rev

Question

TOBY ZED COMPANY Income Statement For the Year Ended November 30, 2012 Sales revenue 7,700,000 Cost of goods sole Beginning inventory $1,900,000 Purchases $4,400,000 Goods available for sale $6,300,000 Ending inventory $1,400,000 Total cost of goods sold 4,900,000 Gross profit 2,800,000 Operating expenses 1,150,000 Net income 1,650,000 Additional information: 1. Accounts receivable increased $250,000 during the year, and inventory decreased $500,000. 2. Prepaid expenses increased $150,000 during the year. 3. Accounts payable to suppliers of merchandise decreased $340,000 during the year. 4. Accrued expenses payable decreased $100,000 during the year. 5. Operating expenses include depreciation expense of $90,000. Instructions Prepare the operating activities section of the statement of cash flows for the year ended November 30, 2012, for Toby Zed Company, using the indirect method.

Explanation / Answer

operating activities section of the statement of cash flows for the year ended November 30(indirect Method) Particulars Amount($) Net Income $16,50,000 Add:Depreciation $90,000 Decrease in Assets ================== Inventory $5,00,000 Increase in Liabilities ======================== Null $0 Less: Increase in Assets =================== Accounts Receivable $2,50,000 Prepaid Expenses $1,50,000 Decrease in Liabilities ======================= Account Payables $3,40,000 Accrued Expenses Payable $1,00,000 ================================================= Operating Cash Flows $14,00,000 =================================================

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