Case A Case B Year 2 Year 1 Year 2 Year 1 Sales Revenue $11,000 $9,000 $21,000 $
ID: 2427331 • Letter: C
Question
Case A
Case B
Year 2
Year 1
Year 2
Year 1
Sales Revenue
$11,000
$9,000
$21,000
$18,000
Cost of Goods Sold
6,000
5,500
12,000
11,000
Gross Profit
5,000
3,500
9,000
7,000
Depreciation Expense
1,000
1,000
1,500
1,500
Salaries and Wages Expense
2,500
2,000
5,000
5,000
Net Income
1,500
500
2,500
500
Accounts Receivable
300
400
750
600
Inventory
750
500
730
800
Accounts Payable
800
700
800
850
Salaries and Wages Payable
1,000
1,200
200
250
For the following two independent cases, show the cash flow from operating activities section of the statement of cash flows for year 2 using the indirect method.
Case A
Case B
Year 2
Year 1
Year 2
Year 1
Sales Revenue
$11,000
$9,000
$21,000
$18,000
Cost of Goods Sold
6,000
5,500
12,000
11,000
Gross Profit
5,000
3,500
9,000
7,000
Depreciation Expense
1,000
1,000
1,500
1,500
Salaries and Wages Expense
2,500
2,000
5,000
5,000
Net Income
1,500
500
2,500
500
Accounts Receivable
300
400
750
600
Inventory
750
500
730
800
Accounts Payable
800
700
800
850
Salaries and Wages Payable
1,000
1,200
200
250
Explanation / Answer
Case A Case B Net income 1,500 2,500 Add:Depreciation expense 1,000 1,500 Account receivable decrease(increase) 100 (150) invenotry decrease(increase) (250) 70 Accounts payable(decrease)increase 100 (50) Salaries & wages payable (decrease)increase (200) (50) Cash flow from operating activities 2,250 3,820
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