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Question No. 2 Presented below is the income statement of Cowan, Inc.: Sales $380,000 Cost of goods sold 225,000 Gross profit $155,000 Operating expenses 85,000
Question No. 2
Presented below is the income statement of Cowan, Inc.:
Sales | $380,000 |
Cost of goods sold | 225,000 |
Gross profit | $155,000 |
Operating expenses | 85,000 |
Income before income taxes | 70,000 |
Income taxes | 28,000 |
Net income | 42,000 |
In addition, the following information related to net changes in working capital is presented:
Debit | Credit | |
Cash | $12,000 | |
Accounts receivable | 20,000 | |
Inventories | 19,400 | |
Salaries payable (operating expenses) | $8,000 | |
Accounts payable | 12,000 | |
Income taxes payable | 3,000 |
The company also indicates that depreciation expense for the year was $16,700 and that the deferred tax liability account increased $2,600.
Instructions
Prepare a schedule computing the net cash flow from operating activities that would be shown on a statement of cash flows using the indirect method only.
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