Question

2. The following income statement and information about selected current assets and current liabilities      is...

2. The following income statement and information about selected current assets and current liabilities

     is available for Peters Company:

                                                                 Peters Company

                                                                Income Statement

                                                 For the Year Ended December 31, 2018

                          Sales……………………………………………………..                 $180,000                                    

                          Cost of goods sold……………………………………….                   104,000

                          Gross profit from sales……………………………………                $ 76,000

                          Operating expenses:

                                 Salaries and wages expense………………………… $25,000  

                                 Depreciation expense………………………………..     5,000

                                 Rent expense…………………………………............    7,200

                                 Insurance expense……………………………………    1,900       39,100

                           Income from operations………………………………….                 $ 36,900

                           Gain on sale of land………………………………………                     2,000

                           Net income………………………………………………..                $ 38,900

                                                                                     December 31, 2018      December 31, 2017            

                                                                                       

                   Accounts receivable……………………              $27,600                      $24,000

                   Prepaid expenses……………………….                    550                              400

                   Merchandise inventory…………………               18,200                         20,000

                   Accounts payable……………………….               27,100                        31,000

                   Salaries payable…………………………              10,400                          9,000

                   Income taxes payable……………………                   300                             250

    Required:

    Use the above information to calculate the net cash provided or used by operating activities using the

     indirect method.

Business   Accounting   
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Answer #1
Cash Flow from Operating Activities
Cash Flow from Operating Activities
Net Income $ 38,900
Adjustments:
Depreciation $    5,000
Increase in Accounts Receivable $ (3,600)
Increase in Prepaid Expenses $      (150)
Decrease in Inventory $    1,800
Decrease in Account Payable $ (3,900)
Increase in Salary Payable $    1,400
Increase in Income Tax Payable $          50 $        600
Cash Flow from Operating Activities $ 39,500
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