Question

Arundel company disclosed the following information for its recent calendar year. income statement data selected year-end balance sheet data revenues $ 105,000 accounts receivable decrease $ 26,000 expenses:

purchased a machine for cash 20,000
salaries expense 70,000
salaries payable increase 23,000
utilities expense 34,000
interest payable decrease 12,000
depreciation expense 31,600
interest expense 8,200
net loss $ (38,800)

prepare the operating activities section of the statement of cash flows using the indirect method.

Answer 1

The operating activities section of the statement of cash flows for Arundel Company using the indirect method results in total net cash from operating activities of $29,800 after adjusting for depreciation and changes in working capital.

Step-by-step explanation:

The operating activities section of the statement of cash flows using the indirect method for Arundel Company can be prepared as follows:

Net Loss: $(38,800)

Adjustments for non-cash items:

• Add back Depreciation Expense: $31,600

Changes in working capital:

• Decrease in Accounts Receivable: Add $26,000
• Increase in Salaries Payable: Add $23,000
• Decrease in Interest Payable: Subtract $12,000

Net cash provided by (used in) operating activities:

• Net Loss: $(38,800)
• Add: Depreciation Expense: $31,600
• Add: Decrease in Accounts Receivable: $26,000
• Add: Increase in Salaries Payable: $23,000
• Subtract: Decrease in Interest Payable: $(12,000)
• Total Net Cash from Operating Activities: $29,800

To calculate the total net cash from operating activities, we start with the net loss and adjust for non-cash expenses (depreciation) and the change in working capital items (accounts receivable, salaries payable, interest payable). The total cash provided by operating activities would be the sum of these adjustments.