Question

The income statement and selected balance sheet information for Direct Products Company for the year ended...

The income statement and selected balance sheet information for Direct Products Company for the year ended December 31 are presented below.
Income Statement
  Sales Revenue $ 42,600
  Expenses:
       Cost of Goods Sold 18,000
       Depreciation Expense 1,400
       Salaries and Wages Expense 8,400
       Rent Expense 3,900
       Insurance Expense 1,600
       Interest Expense 1,500
       Utilities Expense 1,100
  Net Income $ 6,700
Selected Balance Sheet Accounts
Ending Balances Beginning Balances
  Accounts Receivable $ 565     $ 590    
  Inventory 830     690    
  Accounts Payable 425     470    
  Prepaid Rent 27     21    
  Prepaid Insurance 26     30    
  Salaries and Wages Payable 68     44    
  Utilities Payable 22     16    
Required:

Prepare the cash flows from operating activities section of the statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)
Business   Accounting   
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Answer #1

Prepare the cash flows from operating activities section of the statement of cash flows using the indirect method

Cash flow from operating activities
Net income 6700
Adjustment to reconcile net income to net cash flow from operating activities
Depreciation expense 1400
Decrease account receivable 25
Increase inventory -140
Decrease account payable -45
Increase prepaid rent -6
Decrease prepaid insurance 4
Increase salaries and wages payable 24
Increase utilities payable 6
Net cash flow from operating activities 7968
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