The income statement of Rodriquez Company is shown below. Additional information
ID: 2380470 • Letter: T
Question
The income statement of Rodriquez Company is shown below.
Additional information:
Prepare the operating activities section of the statement of cash flows using the direct method.
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2012 Sales $6,818,660 Cost of goods sold Beginning inventory $1,899,830 Purchases 4,305,520 Goods available for sale 6,205,350 Ending inventory 1,609,960 Cost of goods sold 4,595,390 Gross profit 2,223,270 Operating expenses Selling expenses 447,790 Administrative expenses 702,490 1,150,280 Net income $1,072,990
Explanation / Answer
Sales 6,818,660
Purchases (4,305,520)
Selling expenses (447,790)
Administrative expenses (651890)
[702,490- 50600]
(a) 1413460
ADJUSTMENT FOR WORKING CAPITAL CHANGES
Accounts receivable decreased 315,400
Prepaid expenses increased (171,300)
Accounts payable to suppliers of merchandise decreased (268,860)
Accrued expenses payable decreased (127,630 )
(b) (252390)
Net cash inflow from operating activities [ (a) -(b)] = 1161070
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