s. Use the following income statement and information about selected current ass

Question

s. Use the following income statement and information about selected current assets and current liab calculate the net cash provided or used by operating activities using the indirect method. Use the tempo the next page. Hint: Add back loss on sale of land. Check: Net cash provided by operating activities should be and current liabilities to number greater than $38,000 but less than $41,000. (5 points) National L Inc. Income Statement For Year Ended December 31, 2018 $180.000 Cost of goods sold Gross profit from sales $76,000 Salaries and wages expense Depreciation expense Rent expense Interest expense $25,000 8,000 6,200 $34,900 Income from operations Loss on sale of land Net income Selected beginning and ending balances of current asset and current liability accounts, all of which relate to operating activities, are as flows Balance Accounts receivable Merchandise inventory Prepaid insurance Accounts payable Salaries and wages payable Dec. 31, 2018 $27,600 22,000 500 27,000 10,400 300 Dec. 31, 2017 $24.000 20,000 400 26,000 9.000 Interest payable 200

Explanation / Answer

Solution:

National L Inc. Statement of Cash Flows (Partial) For year ended December 31, 2018 Particulars Details Amount Cash Flow from Operating Activities: Net Income $31,900.00 Adjustments to reconcile net income to net cash provided by operations: Depreciation Expense $8,000.00 Loss on sale of land $3,000.00 Increase in accounts receivables ($27,600 - $24,000) -$3,600.00 Increase in Merchandise inventory ($22,000 - $20,000) -$2,000.00 Increase in prepaid insurance ($500 - $400) -$100.00 Increase in accounts payable ($27,000 - $26,000) $1,000.00 Increase in salary and wages payable ($10,400 - $9,000) $1,400.00 Increase in interest payable ($300 - $200) $100.00 Net Cash provided by operating activities $39,700.00

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