Calculating Net Cash Flow from Operating Activities (Indirect Method)
Weber Company had a $21,000 net loss from operations for 2016. Depreciation expense for 2016 was $8,600 and a 2016 cash dividend of $6,000 was declared and paid. Balances of the current asset and current liability accounts at the beginning and end of 2016 follow. Did Weber Company’s 2016 operating activities provide or use cash? Use the indirect method to determine your answer.
Ending | Beginning | |
---|---|---|
Cash | $3,500 | $7,000 |
Accounts Receivable | 16,000 | 25,000 |
Inventory | 50,000 | 53,000 |
Prepaid Expenses | 6,000 | 9,000 |
Accounts Payable | 12,000 | 8,000 |
Accrued Liabilities | 5,000 | 7,600 |
Net loss | $Answer |
Add (deduct) items to convert net loss to cash basis | |
Add back depreciation | Answer |
Subtract change in operating assets: | |
Accounts receivable | Answer |
Inventory | Answer |
Prepaid expenses | Answer |
Add change in operating liabilities: | |
Accounts payable | Answer |
Accrued liabilities | Answer |
Net cash provided by operating activities | $Answer |
Weber Company's 2016 operating activities (Fill in the blank:
provided or used ? ) cash.
Net loss | -21000 | |
Add (deduct) items to convert net loss to cash basis | ||
Add back depreciation | 8600 | |
Subtract change in operating assets: | ||
Accounts receivable | 9000 | =25000-16000 |
Inventory | 3000 | =53000-50000 |
Prepaid expenses | 3000 | =9000-6000 |
Add change in operating liabilities: | ||
Accounts payable | 4000 | =12000-8000 |
Accrued liabilities | -2600 | =5000-7600 |
Net cash provided by operating activities | 4000 | |
Weber Company's 2016 operating activities provided cash |
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