Wessen Company reports net income of $189,000 for the year ended December 31, 20

Question

Wessen Company reports net income of $189,000 for the year ended December 31, 2010. It also reports $46,700 depreciation expense, $22,310 amortization expense and a $15,900 gain on the sale of machinery. Its comparative balance sheets reveal a $29,200 increase in accounts receivable, $21,300 decrease in accounts payable, $11,370 increase in prepaid expenses, and $34,040 decrease in wages payable. What is the net cash flows provided (used) by operating activities using the indirect method?

($146,200)

$178,000

$146,200

($178,000)

$338,020

Use the following information and the indirect method to calculate the net cash provided or used by operating activities:

$56,200.

$38,000.

$18,000.

$58,000.

$91,800.

Given the following information, determine the amount of cash flows from investing and financing activities.

Cash used by investing activities, $35,000;
Cash used by financing activities, $52,000.

Cash provided by investing activities, $12,000;
Cash provided by financing activities, $75,000.

Cash provided by investing activities, $35,000;
Cash provided by financing activities, $75,000.

Cash used by investing activities, $12,000;
Cash used by financing activities, $75,000.

Cash provided by investing activities, $35,000;
Cash provided by financing activities, $52,000.

  Cash paid for purchase of plant assets $20,000   Decrease in interest payable 4,000   Depreciation expense 31,000   Gain on retirement of bonds 32,000   Increase in accounts receivable 40,100   Loss on sale of plant assets 5,100   Net Income 78,000

Explanation / Answer

1 Wessen Company reports net income of $189,000 for the year ended December 31, 2010. It also reports $46,700 depreciation expense, $22,310 amortization expense and a $15,900 gain on the sale of machinery. Its comparative balance sheets reveal a $29,200 increase in accounts receivable, $21,300 decrease in accounts payable, $11,370 increase in prepaid expenses, and $34,040 decrease in wages payable. What is the net cash flows provided (used) by operating activities using the indirect method?

Net income $189,000
+ depreciation $46,700
+ amortization $22,310
- gain on sale of machinery ($15,900)
- increase in accounts receivable ($29,200)
- decrease in accounts payable ($21,300)
- increase in prepaid expenses ($11,370)
- decrease in liabilities ($34,040)
= Net Cash Flow From Operating Activities = $146,200

3.
Cash provided by investing activities, $35,000; (sale of plant)
Cash provided by financing activities, $75,000.(issuing of stock)

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