Question

The following information was provided by Paul’s Guitar Shop

•Net Income $12,950

•Depreciation Expense $2000

•Increase Accounts receivable $300

•Increase Inventory $3,800

•Increase Prepaid expenses $1,000

•Decrease Accounts payable $9,000

•Increase Accrued expenses and unearned revenues $1,450

•Purchase of property and equipment $101,000

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•Using the indirect method, calculate the net cash provided by operating activities

Paul’s Guitar Shop Statement of Cash Flows For year ended December 31, 2019
Cash flows from operating activities	$	$
Adjustments to reconcile net income to net cash provided by operating activities: Income statement items not affecting cash
Depreciation expense
Changes in current assets and liabilities
Net Cash provided by operating activities

Answer 1

Paul’s Guitar Shop
Partial Statement of Cash Flows - Indirect method
For the Year ended December 31, 2019
	$
Cash flows from operating activities
Net income	12,950.00
Adjustments to reconcile net income to net Cash flows from operating activities :
Depreciation expense	2,000.00
Changes in current operating assets and liabilities:
Increase in accounts receivable	(300.00)
Increase in accounts payable	(3,800.00)
Increase in prepaid expense	(1,000.00)
Decrease in Accounts payable	(9,000.00)
Increase Accrued expenses and unearned revenues	1,450.00
Net Cash provided by Operating Activities	2,300.00