Please provide a thorough explaination on the following questions and the Excel formulas you used to confirm my understanding. Thank you!
| 1. Identify the change in account balances for 2020 and the effect that change will have on Cash. |
| 2. Compute ABC's operating cash flow for 2020 using the indirect method. |
| 3. Compute ABC's operating cash flow for 2020 using the direct method. |
Income Statement For the period ended December 31, 2020 Sales Dividend income Cost of goods sold Wages expense Advertising expense Depreciation expense Income tax expense Loss on sale of investments Net income \begin{tabular}{|r|} \hline 390,000 \\ \hline 10,000 \\ \hline 400,000 \\ \hline 238,000 \\ \hline 87,000 \\ \hline 15,000 \\ \hline 16,000 \\ \hline 22,000 \\ \hline 7,000 \\ \hline 15,000 \\ \hline \end{tabular} Other Information: The company declared and paid $23,000 in cash dividends during 2020 PPE was purchased for cash in 2020. Additional common stock was issued for cash. Investments costing $11,000 and carried at $10,000 were sold for cash at a $2,000 realized loss in 2020 . Indirect Method Dec 312020 Net income Depreciation expense Loss on sale of investments Accounts receivable Inventory Prepaid advertising Accounts payable Wages payable Income tax payable Cash from operating activities ABC Company Statement of Cash Flow Direct Method Dec 312020 Cash received from customers Cash received as dividends Cash paid for merchandise purchases Cash paid to employees Cash paid for advertising Cash paid for income taxes Net cash provided by operating activities Income Statement For the period ended December 31, 2020 Sales Dividend income Cost of goods sold Wages expense Advertising expense Depreciation expense Income tax expense Loss on sale of investments Net income \begin{tabular}{|r|} \hline 390,000 \\ \hline 10,000 \\ \hline 400,000 \\ \hline 238,000 \\ \hline 87,000 \\ \hline 15,000 \\ \hline 16,000 \\ \hline 22,000 \\ \hline 7,000 \\ \hline 15,000 \\ \hline \end{tabular} Other Information: The company declared and paid $23,000 in cash dividends during 2020 PPE was purchased for cash in 2020. Additional common stock was issued for cash. Investments costing $11,000 and carried at $10,000 were sold for cash at a $2,000 realized loss in 2020 . Indirect Method Dec 312020 Net income Depreciation expense Loss on sale of investments Accounts receivable Inventory Prepaid advertising Accounts payable Wages payable Income tax payable Cash from operating activities ABC Company Statement of Cash Flow Direct Method Dec 312020 Cash received from customers Cash received as dividends Cash paid for merchandise purchases Cash paid to employees Cash paid for advertising Cash paid for income taxes Net cash provided by operating activities
