Question

Below is the income statement for apple stores for the year-ending december 31, 2023: sales (net) $600,000 cost of goods sold (372,000) gross profit 228,000 wage expense (42,000) depreciation expense (36,000) advertising expense (18,000) administrative expense (6,000) income from operations 126,000 gain on sale of equipment 60,000 net income $186,000 the following balances were derived from the balance sheet: december 31, 2023 december 31, 2022 accounts receivable $120,000 $108,000 prepaid advertising expense 6,000 3,600 inventory 48,000 60,000 accounts payable 36,000 60,000 wages payable 6,000 4,800 calculate total cash flow from operations at december 31, 2023: select one:

a. $124,800
b. $136,800
c. $160,800
d. $184,800
e. $187,200

Answer 1

To calculate total cash flow from operations at December 31, 2023, for Apple Stores, adjustments to net income are made for changes in working capital and non-cash expenses. After accounting for the changes in accounts receivable, inventory, accounts payable, prepaid advertising, wages payable, and subtracting the gain on sale of equipment, the total cash flow from operations is $136,800.

Step-by-step explanation:

To calculate the total cash flow from operations for Apple Stores for the year-ending December 31, 2023, we start with the net income and adjust for changes in working capital and non-cash expenses. We also add back non-operating gains that do not affect cash flow, such as the gain on the sale of equipment.

$186,000 (net income) + $36,000 (depreciation) - $12,000 (accounts receivable) + $12,000 (inventory) - $24,000 (accounts payable) - $2,400 (prepaid advertising) + $1,200 (wages payable) - $60,000 (gain on sale of equipment) = $136,800, which is option B.