Question

The income statement of Indigo Company is shown below.

INDIGO COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2017
Sales revenue				$ 6,630,000
Cost of goods sold
Beginning inventory		$ 1,840,000
Purchases		4,520,000
Goods available for sale		6,360,000
Ending inventory		1,530,000
Cost of goods sold				4,830,000
Gross profit				1,800,000
Operating expenses
Selling expenses		450,000
Administrative expenses		660,000		1,110,000
Net income				$ 690,000

Additional information:

1.		Accounts receivable decreased $ 290,000 during the year.
2.		Prepaid expenses increased $ 180,000 during the year.
3.		Accounts payable to suppliers of merchandise decreased $ 260,000 during the year.
4.		Accrued expenses payable decreased $ 120,000 during the year.
5.		Administrative expenses include depreciation expense of $ 60,000.

Prepare the operating activities section of the statement of cash flows for the year ended December 31, 2017, for Indigo Company, using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Answer 1

INDIGO COMPANY
Statement of Cash flows
For the Year Ended December 31, 2017
Cash flows from operating activities
Net Income		$   690,000
Adjustments to reconcile net income to ;
Depreciation expense	$      60,000
Decrease in accounts receivable	$   290,000
Increase in prepaid expenses	$ (180,000)
Decrease in accounts payable	$ (260,000)
Decrease in accrued expense payable	$ (120,000)
		$ (210,000)
Net cash provided by operating activities		$   480,000

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answered by: anonymous