Question

Twix Dots Skor

Net income $4,200 $106,000 $76,800
Depreciation expense 31,600 8,400 25,600
Accounts receivable increase (decrease) 42,200 21,000 (4,200 )
Inventory increase (decrease) (21,200 ) (10,600 ) 10,600
Accounts payable increase (decrease) 25,400 (23,400 ) 14,800
Accrued liabilities increase (decrease) (46,600 ) 12,800 (8,400 )

Required:
For each separate company, compute cash flows from operations using the indirect method. (Amounts to be deducted should be indicated by a minus sign.)

Answer 1

Twix, Dots, and Skor

Twix Dots Skor

Net income $4,200 $106,000 $76,800

Depreciation expense 31,600 8,400 25,600

Accounts receivable increase (decrease) 42,200 21,000 (4,200 )

Inventory increase (decrease) (21,200 ) (10,600 ) 10,600

Accounts payable increase (decrease) 25,400 (23,400 ) 14,800

Accrued liabilities increase (decrease) (46,600 ) 12,800 (8,400 )

Cash flows from operations ($6,400) $93,400 $102,400

Step-by-step explanation:

a) Data and Calculations:

Twix Dots Skor

Net income $4,200 $106,000 $76,800

Depreciation expense 31,600 8,400 25,600

Accounts receivable increase (decrease) 42,200 21,000 (4,200 )

Inventory increase (decrease) (21,200 ) (10,600 ) 10,600

Accounts payable increase (decrease) 25,400 (23,400 ) 14,800

Accrued liabilities increase (decrease) (46,600 ) 12,800 (8,400 )

b) Depreciation is added back to the net income. Increases in current assets are cash outflows, reducing cash flows, while decreases are cash inflows, increasing cash flows. On the other hand, increases in current liabilities are cash inflows, increasing cash flows, while decreases are cash outflows, reducing cash flows.