Question

Apple Heating Co. reported $27,000 of net income. The company uses the visual inspection method to...

Apple Heating Co. reported $27,000 of net income. The company uses the visual inspection method to complete the statement of cash flows. Additional information is listed below:

Account Change
Prepaid assets $400 increase
Inventory 700 decrease
Accounts payable 250 decrease
Dividends payable 50 increase


The net cash provided by operating activities was

$27,150

$26,850

$27,050

$26,900

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Homework Answers

Answer #2

(C) $27,050

Explanation:

Let us prepare the Cash flow from Operating Activities Section of the Cash Flow Statement

Net Income $ 27,000
Adjustment for changes in Working Capital:
Increase in Prepaid Assets ($ 400)
Decrease in Inventory $ 700
Decrease in Accounts Payable ($ 250)
Net Changes in Working Capital $ 50
Net Cash flow from Operating Activities $ 27,050

Dividend payable does not appear in cash flow statement until it is paid. Dividend paid is classified under cash flow from financing activities in a cash flow statement.

answered by: anonymous
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