Question

The following information pertains to Peak Heights Company:

Income Statement for Current Year

Sales $85,900
Expenses Cost of goods sold $51,675
Depreciation expense 6,700
Salaries expense 11,900 70,275
Net income $15,625

Partial Balance Sheet Current year Prior year
Accounts receivable $9,800 $14,200
Inventory 13,100 9,100
Salaries payable 1,620 870

Required:
Present the operating activities section of the statement of cash flows for Peak Heights Company using the indirect method.

Answer 1

Peak Heights Company

PEAK HEIGHTS COMPANY

Statement of Cash Flows

Operating Activities Section

Net income $15,625

Non-cash flow: Depreciation 6,700

Changes in working capital:

Accounts receivable -$4,400

Inventory 4,000

Salaries payable 750

Net cash from operating activities $22,675

Step-by-step explanation:

A) Data and Calculations:

Peak Heights Company:

Income Statement for Current Year

Sales $85,900

Expenses Cost of goods sold $51,675

Depreciation expense 6,700

Salaries expense 11,900 70,275

Net income $15,625

Partial Balance Sheet Current year Prior year Changes

Accounts receivable $9,800 $14,200 -$4,400

Inventory 13,100 9,100 4,000

Salaries payable 1,620 870 750