Computation of Net Income from Cash Flows from Operations (Direct Method)

The following partially completed work sheet is provided for ATM Corporation, which uses the direct method in computing net cash flows from operations:

Key:
1. Decrease in Accounts Receivable (net), $4,500.
2. Loss on sale of equipment, $1,500.
3. Increase in Inventory, $10,000.
4. Increase in Accounts Payable, $3,000.
5. Depreciation for the year, $8,000.
6. Decrease in Prepaid Expenses, $1,000.
7. Increase in Accrued Liabilities, $2,500.
Required:
Complete the work sheet with the key items above and compute the net income (loss) to be reported by ATM Corporation on its income statement for 2009.

Transcribed Image Text:

ATM Corporation Partial Work Sheet-Cash Flows from Operations (Direct Method) For the Year Ended December 31, 2009 Net sales revenue Expenses: Cost of goods sold Depreciation. Loss on sale of equipment Other (cash) expenses Total expenses Net income (net cash flows from operations) Adjustments Accrual Basis Cash Debits Credits Basis $150,000 $ 75,000 0 0 26,000 $101,000 $ 49,000