QUESTION 5 (10 POINTS) The current sections of Alex Auto Company balance sheet a

ID: 2431973 • Letter: Q

Question

QUESTION 5 (10 POINTS) The current sections of Alex Auto Company balance sheet as of December 31, 2014 and 2013 are presented here. Alex Auto Company net income for 2014 was $ 9,500. Depreciation expense was $1,500. 2014 2013 CURRENT ASSETS: Cash $92,100 Accounts Receivable 64,500 17,000 69,200 80,000 166,200 Inventory 87,000 $243,600 TOTAL CURRENT ASSETS CURRENT LIABILITIES: Accounts Payable Salaries Payable 57,900 14,400 56,200 17,100 REQUIREMENTS Prepare the operating activities section of Alex Auto Company's statement of cash flows for year ended December 31, 2014.

Explanation / Answer

Answer

>Decrease in Current Assets and Increase in Current Liabilities are ADDED to Net Income.

>Increase in current assets and Decrease in Current Liabilities are DEDUCTED from Net Income.

Cash Flows from Operating Activities

Net Income

$ 9,500.00

Adjustement to reconcile Net Income to

Net Cash provided by Operating activities

Depreciation expense

$ 1,500.00

Decrease in Accounts receivables

$ 4,700.00

Increase in Inventory

$ (7,000.00)

Increase in Accounts Payable

$ 1,700.00

Decrease in Salaries payable

$ (2,700.00)

$ (1,800.00)

Net Cash provided by Operating activities

$ 7,700.00