M12-5 Computing Cash Flows from Operating Activities (Indirect Method) [LO 12-2]

Question

M12-5 Computing Cash Flows from Operating Activities (Indirect Method) [LO 12-2] The two independent cases are listed below $11,400 $ 11,000 $21.400 $ 20,000 6,360 7,400 12,360 12,360 5,040 3,600 9,040 7,640 1,100 1,100 1,700 1,700 Salaries and Wages Expense 2,100 1,600 5,400 5,400 1,840 900 1,940 540 790 620 Cost of Goods Sold Gross Profit Net Income Accounts Receivable 320 440 770 540 750 840 720 840 1,020 840 Salaries and Wages Payable 1,240 220 290 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 to Reconcile Net Income to Net Cash and

Explanation / Answer

Cash flows from operating activities CASE A CASE B Net income $                1,840 $                1,940 Cash flows from operating activities Adjustments for: DepreciationExpenses $                1,100 $                1,700 Gain on sale of investment Loss on sale of Equipment (Increase) / Decrease in Account receivables $                   120 $                  -170 Inventory Decrease / (Increase) $                  -230 $                      90 Accounts payable Increase / ( Decrese) $                  -120 $                      70 Wages Payable $                   220 $                      70 Net cash from operating activities $                2,930 $                3,700

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