Question

idwell Company has provided the following partial comparative balance sheets and the income statement for 20X2. Tidwell Company Comparative Balance Sheets At December 31, 20X1 and 20X2 1 20X1 20X2 2 Current assets: 3 Accounts receivable $353,000.00 $277,500.00 4 Inventories 130,000.00 154,000.00 5 Current liabilities: 6 Accounts payable 301,000.00 239,000.00 Tidwell Company Income Statement For the Year Ended December 31, 20X2 1 Revenues $1,200,000.00 2 Gain on sale of equipment 48,000.00 3 Cost of goods sold (652,000.00) 4 Depreciation expense (124,000.00) 5 Interest expense (21,000.00) 6 Net income $451,000.00 Required: Compute operating cash flows using the direct method.

Answer 1

particulars	income statement ($)	Adjustments ($)	cash flows ($)
revenues (refer working sheet 1)	1200000	75500	1275500
gain on sale of equipment	48000	-48000
cost of goods sold (refer working sheet 2, 3)	-652000	-24000
		-62000	-738000
depreciation expenses	-124000	124000
interest expenses	-21000		-21000
net income	451000
net cash from operating activities			516500

1	accounts receivable	Amount ($)
	20x2	277500
	20x1	353000
	difference	-75500
2	inventory	Amount ($)
	20x1	130000
	20x2	154000
	difference	24000
3	accounts payable	Amount ($)
	20x1	301000
	20x2	239000
	difference	-62000