Question

Question 1. Portions of the financial statements for Software Associates are provided below.

SOFTWARE ASSOCIATES Income Statement For the year ended December 31, 2021
Net sales					$	650,000
Expenses:
Cost of goods sold	$	390,000
Operating expenses		124,000
Depreciation expense		32,400
Income tax expense		46,000
Total expenses						592,400
Net income					$	57,600

SOFTWARE ASSOCIATES
Selected Balance Sheet Data
December 31, 2021, compared to December 31, 2020
Decrease in accounts receivable	$	9,400
Decrease in inventory		12,400
Increase in prepaid rent		2,400
Decrease in salaries payable		3,400
Increase in accounts payable		6,400
Increase in income tax payable		7,400

Required:

Prepare the operating activities section of the statement of cash flows for Software Associates using the indirect method. (List cash outflows and any decrease in cash as negative amounts.)

2. Prepare a horizontal analysis for Year 2 using Year 1 as the base year. (Note: If the percentage increase or decrease cannot be calculated, then leave the cell blank. Decreases should be indicated by a minus sign. Round your percentage answers to 1 decimal place.)

Answer 1