Question
1) For each item listed below, indicate the effect on net income in arriving at cash flows from operations by choosing one of the following
1)
For each item listed below, indicate the effect on net income in arriving at cash flows from operations by choosing one of the following code letters.
Code
Cash Flows from Operating Activities
Add to Net Income A
Deduct from Net Income D
1. A decrease in accounts receivable
2. Increase in inventory
3. Increase in prepaid expenses
4. A decrease in accounts payable
5. Decrease in accrued liabilities
6. Increase in income taxes payable
7. Depreciation expense
8. Loss on sale of investment
9. Gain on disposal of equipment
10. Depletion expense
2)
Please complete the following:
Net Income......................................................................................... $177,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense, $15,000........................................................ _______
Increase in accounts receivable, $45,000........................................... _______
Increase in inventory, $22,000......................................................... _______
Decrease in accounts payable, $11,800............................................. _______
Increase in income taxes payable, $1,500.......................................... _______
Gain on sale of land, $5,000............................................................ _______
Net cash provided (used) by operating activities.................................. _______
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