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andrew11 [14]
3 years ago
7

Amazing Industries began 2018 with accounts​ receivable, inventory, and prepaid expenses totaling $ 48 comma 000 and its total c

urrent liabilities totaling $ 37 comma 000. At the end of the​ year, these same current assets totaled $ 49 comma 000​, while its total current liabilities totaled $ 42 comma 000. Net income for the year was $ 89 comma 000. Included in net income were a $ 4 comma 000 gain on the sale of land and depreciation expense of $ 7 comma 000. Show how Amazing 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.)
Business
1 answer:
seropon [69]3 years ago
8 0

Answer:

Net Cash flow from operating $55,000

Explanation:

<em>To determine the net cash flow from operating activities. We will adjust the net income as follows; all decrease in assets and increase in liabilities are added and all increase in assets and decrease in liabilities are subtracted.</em>

                                Amazing Industries  2018

Cash flow from operating activities

                                                      $

Net Income                                48,000

<em>Adjustments:</em>

less gain on sale of land                (4,000)

Add depreciation expense       7.000

increase in current asset           (1,000)           i,e  <em>(49,000 -48,000)</em>

Increase in current liabilities       <u>5000</u>         i.e  <em>(42,000 -37,000)</em>

Net Cash flow from operating      <u>55,000</u>

All decrease in assets and increase in liabilities are added. All increase in assets and decrease in liabilities are subtracte<u>d.</u>

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