Question

In: Accounting

Presented below is the latest income statement of ABC Ltd.:

Presented below is the latest income statement of ABC  Ltd.:

       Sales.............................................................................    $380,000

       Cost of goods sold........................................................      225,000

       Gross profit....................................................................    $155,000

       Operating expenses......................................................        85,000

       Income before income taxes.........................................         70,000

       Income taxes.................................................................        28,000

       Net income....................................................................    $  42,000

In addition, the following information related to net changes in working capital is available:

                                                                                                         Debit                   Credit

       Cash..............................................................................       $12,000

       Accounts receivable (net).............................................           8,000

       Inventories.....................................................................                                   $19,400

       Salaries payable (operating expenses)........................           6,000

       Accounts payable..........................................................                                       9,000

       Income tax payable.......................................................           3,000

ABC Ltd. also reports that depreciation expense for the year was $13,700 and that the deferred tax liability account increased $2,600.

Instructions

Prepare a schedule calculating the net cash flow from operating activities that would be shown on a statement of cash flows:

a)    using the indirect method.

b)    using the direct method.

Solutions

Expert Solution

ekkarill92 answered 2 years ago
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