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The two independent cases are listed below: Case A Case B Year 2 Year 1 Year 2 Year 1 Sales Revenue $11,000 $9,000 $21,000 $18,000 Cost of Goods Sold 6,000 5,500 12,000 11,000 Gross Profit 5,000 3,500 9,000 7,000 Depreciation Expense 1,000 1,000 1,500 1,500 Salaries and Wages Expense 2,500 2,000 5,000 5,000 Net Income 1,500 500 2,500 500 Accounts Receivable 300 400 750 600 Inventory 750 500 730 800 Accounts Payable 800 700 800 850 Salaries and Wages Payable 1,000 1,200 200 250 Show the operating activities section of the statement of cash flows for year 2 using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)

Respuesta :

Answer:

Net cash from operating activities are $2,250 for Case A and $3,820 for Case B.

Explanation:

The indirect method of presenting the cash flow statement is a method that starts with net income or loss, and then with additions to or subtractions from of revenue and expense items that are non cash to obtain cash flow from operating activities.

For this question, this can be presented as follows:

Details                                                    Case A ($)          Case B ($)

Net Income                                                    1,500                2,500

Adjustments:

Depreciation Expense                                  1,000                 1,500

Changes in Operating assets & liab.:

(Increase) Decrease in Acct receivables       100                 –150

Decrease (Increase) in Inventory                 –250                    70

Increase (Decrease) in Accounts payable      100                 –50

Increase (Decrease) in Sal. & Wag. Paybl.   –200                 –50  

Net cash from operating activities            2,250               3,820

Tundexi

The Net cash-flow from the operating activities for Case A is $2,250.

The Net cash-flow from the operating activities for Case B is $3,820.

Here, we are preparing the  "Year 2" operating activities section of the cash flows statement using the indirect method

                 Statememt of Cash flow (Operating activities)

                                                                                 Case A     Case B

Particulars                                                               Amount    Amount

Net Income                                                              $1,500     $2,500

Adjustments for Case A & B

Depreciation Expense                                            $1,000     $1,500

Changes in operating assets

& liabilities of Case A & B

(Increase) / Decrease in Account receivables       $100       -$150

Decrease / (Increase) in Inventory                         -$250       $70

Increase / (Decrease) in Accounts payable            $100       -$50

Increase / (Decrease) in Sal. & Wage Payable       $200      -$50

Net cash from operating activities                       $2,250    $3,820

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