Question

Westfall Industries began 2018 with accounts​ receivable, inventory, and prepaid expenses totaling $ 50 comma 000 and its total current liabilities totaling $ 36 comma 000. At the end of the​ year, these same current assets totaled $ 48 comma 000​, while its total current liabilities totaled $ 40 comma 000. Net income for the year was $ 81 comma 000. Included in net income were a $ 4 comma 000 loss on the sale of land and depreciation expense of $ 8 comma 000. Show how Westfall should report cash flows from operating activities for 2018. The company uses the indirect method. ​(Use parentheses or a minus sign for numbers to be subtracted and for a net decrease in​ cash.)

Answer 1

Answer:

The cash flows from operating activities for 2018 is $99,000.

Explanation:

Westfall Industries

Statement of cash flows (extract)

Net income                                                 $81,000

Add Loss on the sale of land                        4,000

       Depreciation expense                           8,000

       Decrease in current asset                     2,000

       Increase in current liabilities                  4,000

Cash flows from operating activities      $99,000

• Decrease in current assets was arrived at by comparing the closing balance of $48,000 to the opening balance of $50,000.

• Increase in current liabilities was arrived at by comparing the closing balance of $40,000 to the opening balance of $36,000.