Question

MOSS COMPANY Selected Balance Sheet Information December 31, 2018 and 2017 2018 2017 Current assets Cash $ 90,650 $ 32,800 Accounts receivable 31,000 44,000 Inventory 66,000 55,300 Current liabilities Accounts payable 42,400 31,700 Income taxes payable 2,650 3,400 MOSS COMPANY Income Statement For Year Ended December 31, 2018 Sales $ 544,000 Cost of goods sold 355,600 Gross profit 188,400 Operating expenses Depreciation expense $ 48,000 Other expenses 128,000 176,000 Income before taxes 12,400 Income taxes expense Use the information above to calculate this company’s cash flows from operating activities using the indirect method. (Amounts to be deducted should be indicated by a minus sign.)

Answer 1

Answer:

 $65,250

Explanation:

The preparation of the Cash Flows from Operating Activities—Indirect Method is shown below:

Cash flow from Operating activities - Indirect method

Net income $5,000

Adjustment made:

Add : Depreciation expense $48,000

Add: Decrease in accounts receivable $13,000 ($31,000 - $44,000)

Less: Increase in inventory -$10,700 ($66,000 - $55,300)

Add: Increase in accounts payable $10,700 ($42,400 - $31,700)

Less: Decrease in income tax payable-$750  ($2,650 - $3,400)

Total of Adjustments $60,250

Net Cash flow from Operating activities                       $65,250