The income statement of Guesser Company is shown below. GUESSER COMPANY INCOME S
ID: 2419052 • Letter: T
Question
The income statement of Guesser Company is shown below.
GUESSER COMPANY
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2014
Sales $755,000
Cost of goods sold 543,000
Gross profit 212,000
Operating expenses
Selling expenses $52,000
Administrative expenses 89,000 141,000
Net income $ 71,000
Additional information:
1. Accounts receivable decreased $63,000 during the year.
2. Inventory increased $38,000 during the year.
3. Prepaid expenses increased $12,000 during the year.
4. Accounts payable to increased $25,000 during the year.
5. Accrued expenses payable increased $6,000 during the year.
6. Administrative expenses include depreciation expense of $20,000.
7. Periodic inventory method was used.
Instructions
Prepare the operating activities section of the statement of cash flows using the direct method for December 31, 2014.
Explanation / Answer
Cash flows from Operating activities: Cash received frm customer (755000+63000) 818000 Cash paid for purchases (543000+38000-25000) -556000 cash paid for Selling expense (52000+12000-6000) -58000 Admin expense paid (89000-20000) -69000 Net provided from operating activities 135000
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