chapter 12 TIoMEWOTR PA12-2 Computing Cash Flows from Operating Activ The income

Question

chapter 12 TIoMEWOTR PA12-2 Computing Cash Flows from Operating Activ The income statement and selected balance sheet information for Direct Pro ended December 31 are presented below. Income Statement $51,600 Sales Revenue Expenses: Cost of Goods Sold Depreciation Expense Salaries and Wages Expense Rent Expense Insurance Expense Interest Expense Utilities Expense 22,500 2,300 9,300 4,800 2,050 1,950 1,550 Net Income 7,150 Selected Balance Sheet Accounts Ending Beginning Balances Balances Accounts Receivable Inventory Accounts Payable Prepaid Rent Prepaid Insurance Salaries and Wages Payable Utilities Payable $ 575 S 610 755 490 23 34 57 18 960 435 31 28 94 26 Required: Prepare the cash flows from operating activities section of the statement of method. (Amounts to be deducted should be indicated with a minus sign.

Explanation / Answer

DIRECT PRODUCTS COMPANY Cash Flow Statement (Partial) For the year ended December 31, Cash flows from operating activities Net Income $ 7,150 Adjustment to reconcile net income to: Depreciation expense $ 2,300 Decrease in accounts receivable $        35 Increase in inventory $   (205) Decrease in accounts payable $     (55) Increase in prepaid rent $        (8) Decrease in prepaid insurance $          6 Increase in salaries and wages payable $        37 Increase in utilities payable $          8 Total adjustments $ 2,118 Net cash provided by operating activities $ 9,268

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