Question

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

Answer 1

Answer:

Net Cash flow from operating $55,000

Explanation:

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.

                                Amazing Industries  2018

Cash flow from operating activities

                                                      $

Net Income                                48,000

Adjustments:

less gain on sale of land                (4,000)

Add depreciation expense       7.000

increase in current asset           (1,000)           i,e  (49,000 -48,000)

Increase in current liabilities       5000         i.e  (42,000 -37,000)

Net Cash flow from operating      55,000

All decrease in assets and increase in liabilities are added. All increase in assets and decrease in liabilities are subtracted.