Answer and Explanation:
The preparation of the operating activities section is presented below
Cash Flows from operating activities
Net Income $88,000
Adjustment made for non cash items:
Depreciation Expense $19,000
Add: Decrease in Account Receivable $15000 ($70,000 - $85,000)
Less: Increase in Inventory $(5000) ($40,000 - $35,000)
Less: Decrease in accounts payable $(8000) ($54,000 - $62,000)
Net cash flows from operating activities $109,000
Answer
The answer and procedures of the exercise are attached in a microsoft excel document.
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Explanation
Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in a single sheet with the formulas indications.
Answer:
The answer is 3. Subtracting cost of goods sold from net sales
Explanation:
Gross margin or Gross profit is the profit a business earn after deducting cost associated with making the goods from net sales(Net sales - Cost of goods sold or Cost of sales)
To calculate cost of goods sold - opening inventory/stock plus purchases minus closing inventory/stock.
The attached file also support this statement.
