Question

1. Terry company's 2019 income statement and comparative balance sheets at December 31 of 2018 and 2019are shown.

Terry Company

                                                                    Income Statement

For the year Ended December 31, 2019

    Sales                                                 $ 390,000

Cost of Goods Sold                             235,000

                                                                                _______

Gross Profit                                                          $ 155,000

Wages Expenses                              $ 63,000

Depreciation Expense                         14,000

Other Operating Expenses                  26,000

Income Tax Expense                           17,000           120,000

______        ________

Net Income                                                           $ 35,000

T Terry Company

Balance Sheets

                                                                       Dec. 31,            Dec. 31,

                    Assets                                          2018                2019

                    Cash                                          $ 16,000         $ 30,000

                    Accounts Receivable (net)            28,000            35,000

                    Inventory                                    110,000            84,000

                    Prepaid Expense                           12,000             8,000

                    Plant Assets                                 178,000           130,000

                    Accumulated Depreciation          (76,000)          (62,000)

                                        

                       Total Assets                             $ 268,000         $ 225,000

                                       

                    Liabilities and Stockholders' Equity

                    Accounts Payable                       $ 27,000         $ 14,000

                    Wages Payable                                 6,000                2,500

                    Income Tax Payable                         3,000               4,500

                    Common Stock                             135,000           125,000

                    Retained Earnings                           97,000             79,000

                                                                          ________        _________

             Total Liabilities and                    $ 268,000 $225,000   

Stockholders' Equity           

    

Cash dividends of $17,000 were declared and paid during 2019 Plant assets of $48,000 were purchased for cash, and later in the year, an additional $10,000 common stock was issued for cash

REQUIRED

            Prepare only the Cash Flows from Operations section of the Cash Flow Statement using the

             indirect method.

Reminder: you need only prepare the Cash Flow from Operations section of the statement

Answer 1

Statement of cash flows (PARTIAL)

Particulars	$	$
Cash flow from Operating Activities
Net income	35,000
Add: Adjustments to reconcile net income to net cash provided by operating activities
Depreciation expense	14,000
Changes in current operating assets and liabilities:
Accounts receivable increase	-7,000
Inventory decrease	26,000
Prepaid expense decrease	4,000
Accounts payable decrease	- 13,000
Wages payable decrease	- 3,500
Income tax payable increase	1,500
Net cash provided by Operating Activities		$57,000