Question

Use the following selected date and additional information from the records of Hitchcock Corporation to answer the question that follows. Balance Sheet Data 2004 2003 Accounts Receivable $50,000 $40,000 Inventories 22,000 25,000 Prepaid Rent 13,000 5,000 Accounts payable 13,000 20,000 Salaries payable 9,000 15,000 Taxes payable 18,000 11,000 Income Statement Data 2004 Depreciation Expense 6,000 Net Income 50,000

Answer 1

Answer:

$35,000

Explanation:

Requirement:  Prepare the Operating Activities section of the Statement of Cash Flows for the year ended 2004. Use the INDIRECT Method

Cash from Operating Activities

Particulars                                                   Amount$

Net income                                                     6000

Add: Depreciation expense                         50000

Operating Cash Flow before                        56000

Change in Working Capital

Add:

Decrease in inventory                      3000

Increase in incomes taxes payable   7000    10000

Less:

Increase in accounts receivable    10000

Increase in prepaid Rent                  8000  

Decrease in accounts payable        7000

Decrease in salaries payable          6000   -31000

Cash from Operating Activities                  $35000