Question

The income statement of Whitlock Company is presented here.

Whitlock Company Income Statement For the Year Ended November 30, 2020

Sales revenue $7,700,000
Cost of goods sold
Beginning inventory $1,900,000
Purchases 4,400,000
Goods available for sale 6,300,000
Ending inventory 1,400,000
Total cost of goods sold 4,900,000
Gross profit 2,800,000
Operating expenses 1,150,000
Net income $1,650,000

Additional information:

a. Accounts receivable increased $200,000 during the year, and inventory decreased $500,000.
b. Prepaid expenses increased $150,000 during the year.
c. Accounts payable to suppliers of merchandise decreased $340,000 during the year.
d. Accrued expenses payable decreased $100,000 during the year.
e. Operating expenses include depreciation expense of $70,000.

Required:
Prepare the operating activities section of the statement of cash flows for the year ended November 30, 2020, for Whitlock Company, using the indirect method.

Answer 1

$1,130,000

Step-by-step explanation:

Preparation of the operating activities section of the statement of cash flows for the year ended November 30, 2020, for Whitlock Company,

Cash flows from operating activities

Net Income $1,650,000

Adjustments to reconcile net income to net cashProvided by operating activities:

Add Depreciation expense $70,000

Add Loss on disposal of equipmentIncrease in accounts receivable $200,000

Less Increase in inventory($500,000)

Add Decrease in prepaid expenses------Increase in prepaid expenses $150,000

Less Decrease in accounts payable($340,000)

Less Increase in accrued exp payable($100,000)

Net cash provided by operating activities $1,130,000

Therefore the operating activities section of the statement of cash flows for the year ended November 30, 2020, for Whitlock Company is $1,130,000