Chapter One Problem 2

Operating activities: Direct and indirect methods The 20X5 income statement of Office Products Inc. follows:

OFFICE PRODUCTS INC. Income Statement for the Year Ended December 31, 20X5
Net sales		$980,000
Cost of goods sold
Beginning inventory	$235,000
Net purchases	720,000
Goods available for sale	$955,000
Less: Ending inventory	260,000
Cost of goods sold		695,000
Gross profit		$285,000
Expenses
Selling & administrative	$149,000
Depreciation	54,000	203,000
		$ 82,000
Other revenue (expense)
Interest expense	$ (18,000)
Gain on sale of equipment	26,000	8,000
Income before income taxes		$ 90,000
Income taxes		27,000
Net income		$ 63,000

The following additional information was obtained from the general ledger and management personnel:

Accounts payable related to the purchases of merchandise decreased during 20X5 by $34,800. In contrast, accounts receivable increased by $24,850

Prepaid expenses and wages payable increased throughout 20X5 by $3550 and $6750, respectively.

This is the original problem. The balance in the income taxes payable account on January 1 was $4,900; the December 31 balance was $4,100. The teacher changed income taxes payable decreased from 800 to 1950.

The company financed a $78,000 equipment purchase by signing a note payable that is due in 20X8.

Instructions

Prepare the operating activities section of the statement of cash flows by using the direct method.

Prepare the operating activities section of the statement of cash flows by using the indirect method.

Please answer this in the following format:

Cash Collected

less cash paid for inventory

Selling & administrative

income Taxes

net Cash provided by operating activities

Indirect method

net income

Accounts payable decreased

Accounts receivable increased

Prepaid expenses increased

Wages payable increased

Inventory

Income taxes payable decreased

Depreciation

Gain on sale of equipment

Net cas provided by operating activites

see Below I have to put these answers in the excell cells.

Copy of ACC206 Guidance Report Week One Excel File Home Insert page Layout Formulas Data Review view Q lell me what you want to do D27 120000 YOUR ANSWERS COURSE START 62 DALE Direct Method Cash collected Leas cash paid for: Inventory Selling & administrative Interest expense 69 Income taxes Net cash provided by operating activities Indirect Method 73 Net income 14 Accounts payable decreased Accounts receivable increaaed Prepaid expenses increased wages payable increased Inventory Income taxes payable decreased Depreciation 81 Gain on sale of equipment Net cash provided by operating activities 83 84 original Account to Student Guidance Report Ready a ype here to search rhonda paul 0:24 AM 4/24/2017 Share