The income statement and selected balance sheet information for Direct Products
ID: 2455489 • Letter: T
Question
The income statement and selected balance sheet information for Direct Products Company for the year ended December 31 are presented below.
Income Statement
Sales Revenue $ 44,600
Expenses:
Cost of Goods Sold 19,000
Depreciation Expense 1,600
Salaries and Wages Expense 8,600
Rent Expense 4,100
Insurance Expense 1,700
Interest Expense 1,600
Utilities Expense 1,200
Net Income $ 6,800
SELECTED BALANCE SHEET ACCOUNTS
Required: Prepare the cash flows from operating activities section of the statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)
Ending balances Beginning balances accounts receivable 580 620 inventory 850 700 accounts payable 440 500 prepaid rent 33 24 prepaid insurance 29 36 salaries and wages payable 72 46 utilities payable 28 19Explanation / Answer
Ans-
Cash flow statement Direct Products Company $ Cash flow from operating activities 6800 Add-Depreciation 1600 Add-interest expense 1600 Add-Decrease in account receivable 4000 Less-increase in inventory -15000 Less-decrease in account payable -6000 less-increase in prepaid rent -900 Add-Decrease in prepaid insurance 900 Add-Increase in salary & wages payable 2600 Add-Increase in Utilities payable 900 Total cash provided by opreation activity -3500Related Questions
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