CARLA COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2017 Sales revenu

Question

CARLA COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2017 Sales revenue $6,470,000 Cost of goods sold Beginning inventory Purchases Goods available for sale Ending inventory Cost of goods sold $2,050,000 4,300,000 6,350,000 1,650,000 4,700,000 1,770,000 Gross profit Operating expenses Selling expenses Administrative expenses 430,000 700,000 1,130,000 $640,000 Net income Additional information: 1. Accounts receivable decreased $290,000 during the year 2. Prepaid expenses increased $170,000 during the year 3. Accounts payable to suppliers of merchandise decreased $280,000 during the year 4. Accrued expenses payable decreased $130,000 during the year 5. Administrative expenses include depreciation expense of $70,000 Prepare the operating activities section of the statement of cash flows for the year ended December 31, 2017, for Carla Company, using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Explanation / Answer

cash flow from operating activities net income 640,000 adjustments to reconcile net income to net cash provided by operating activities depreciation expense 70,000 decrease in accounts receivable 290,000 decrease in inventory (2,050,000 - 1,650,000) 400,000 increase in prepaid expenses -170,000 decrease in accounts payable -280,000 decrease in accrued expenses payable -130,000 180,000 net cash provided by operating activities 820,000

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