Question

The Azuza Company owns no plant assets and had the following income statement for the year:

Sales revenue $930,000
Cost of goods sold $650,000
Wages expense 210,000
Rent expense 42,000
Utilities expense 12,000 914,000
Net income $16,000

Additional information about the company includes:

End of Year Beginning of Year
Accounts receivable $67,000 $59,000
Inventory 62,000 86,000
Prepaid rent 9,000 7,000
Accounts payable 22,000 30,000
Wages payable 9,000 7,000

Required:
Use the preceding information to calculate the cash flow from operating activities using the indirect method. Remember to use negative signs with answers when appropriate.

Answer 1

Answer:Please see answer below

Step-by-step explanation:

Solving

Net income= $16,000

Change in asset and liabilities

Accounts receivable Increased $67,000- $59,000 =- -8000

Inventory Decreased 62,000- 86,000=24,000

Prepaid rent --Increased 9,000- 7,000 = -2000

Accounts payable ---decreased 22,000 -30,000 = -8000

Wages payable ----Increased 9,000- 7,000=2000

Net cash provided by operating activity.=24,000+ 2000-(8000+2000+8000)

= $24,000

Net income= $16,000

Change in asset and liabilities

Accounts receivable--Increase -$8,000

Inventory--Decreased-- $24,000

Prepaid rent --Increased -$2,000

Accounts payable ---decreased-$8,000

Wages payable ----Increased $2,000

Net cash provided by operating activities,= $24,000