Question

Cash Flow from Operating Activities (Indirect Method) The Azuza Company owns no plant assets and had the following income statement for the year: Sales revenue $930,000 Cost of goods sold $650,000 Wages expense 210,000 Rent expense 42,000 Utilities expense 12,000 914,000 Net income $16,000 Additional information about the company includes: End of Year Beginning of Year Accounts receivable $67,000 $59,000 Inventory 62,000 86,000 Prepaid rent 9,000 7,000 Accounts payable 22,000 30,000 Wages payable 9,000 7,000 Use the preceding information to calculate the cash flow from operating activities using the indirect method. Remember to use negative signs with answers when appropriate. Cash Flow from Operating Activities Net Income Answer Add (deduct) items to convert net income to cash basis Accounts Receivable Answer Answer Inventory Answer Answer Prepaid Rent Answer Answer Accounts Payable Answer Answer Wages Payable Answer Answer Cash Provided by Operating Activities Answer

Answer 1

Answer:

Net Cash Provided by operating Activities = $24,000.

Explanation:

Azuza Company      

Statement of Cash Flow      

As of December end current year      

     

CASH FLOWS FROM OPERATING ACTIVITIES     $

Net Income      16,000

Adjustments to reconcile net income to      

net cash provided by operating activities:            

(Increase) Decrease in Current Assets:      

Accounts Receivables      (8,000)

Inventory      24,000  

Prepaid Rent      (2,000)

Increase (Decrease) in Current Liabilities:      

Accounts Payable      (8,000)

Wages Payable      2,000  

NET CASH PROVIDED BY OPERATING ACTIVITIES   24,000