acc. 4/5

E12-5 Understanding the Computation of Cash Flows from Operating Activities (Indirect Method) [LO 12-2] [The following information applies to the questions displayed below. Suppose your company sells goods for $440, of which $270 is received in cash and $170 is on account. The goods cost your company $153 and were paid for in a previous period. Your company also recorded salaries and wages of $140, of which only $44 has been paid in cash. E12-5 Part 2, 3 and 4 2. Calculate the amount that should be reported as net cash flow from operating activities. 4. Show how the indirect method would convert net income (requirement 3) to net cash flow from operating activities (requirement 2). Complete this question by entering your answers in the tabs below. Required 2 Required 3 Required 4 Calculate the amount that should be reported as net cash flow from operating activities. The following are the cash flows for each of the independent cases. Cash provided by (used for) operating activities Cash provided by (used for) investing activities Cash provided by (used for) financing activities Net change in cash Cash position at beginning of year Cash position at end of year Case 1 $ 3,000 (70,000) 75,000 8,000 2,000 $ 10,000 Case 2 Case 3 $(120,000) $ 80,000 10,000 (40,000) 75,000 (30,000) (35,000) 10,000 40,000 30,000 $ 5,000 $ 40,000 Classify each of the following cases as a growing start-up company (S), a healthy established company (E), or an established company facing financial difficulties (F). Case 1 Case 2 Case 3