Question

Cash flows from operating activities for both the indirect and direct methods are presented for Reverse Logic. All amounts are in thousands (000s).

    

Cash Flows from Operating Activities (Indirect method)
Net income	$	156
Adjustments for noncash effects:
Depreciation expense		44
Changes in current assets and current liabilities:
Increase in accounts receivable		(20)
Decrease in inventory		32
Increase in prepaid rent		(3)
Decrease in accounts payable		(13)
Decrease in income tax payable		(9)
Net cash flows from operating activities			$187
Cash Flows from Operating Activities (Direct method)
Cash received from customers	$	3,980
Cash paid to suppliers		(2,569)
Cash paid for operating expenses		(1,143)
Cash paid for income taxes		(81)
Net cash flows from operating activities			$187

  

Required:

Complete the following income statement for Reverse Logic. Assume all accounts payable are to suppliers. (Enter your answers in thousands.)

Answer 1

Income statement
Particulars	$ in 000	$ in 000
Net Sales		4000
Expenses:
Cost of goods sold	2588
Operating Expenses	1140
Depreciation Expense	44
Income tax expense	72
Total Expense		3844
Net Income		156

Net Sales	4000	3980+20
Less: Increase in Accounts Receivable	-20	Given
Cash received from customers	3980	Given

Cost of goods sold	2588	2556+32
Less: Decrease in inventory	-32	Given
Purchases	2556	2569-13
Add: Decrease in Accounts payable	13	Given
Cash paid to suppliers	2569	Given

Operating Expenses	1140	1143-3
Add: Increase in prepaid rent	3	Given
Cash paid for operating expenses	1143	Given

Income tax Expense	72	81-9
Add: Decrease in income tax payable	9	Given
Cash paid for income taxes	81	Given