_{Two exercises of computing cash flow from operations}

PART 2

Exercise 1

Ntido Co. reports net income of $20,000. For the year, depreciation expense is $7,000 and the company reports a gain of $3,000 from the sale of machinery. It also had a $2,000 loss from the retirement of notes. Compute cash flows from operations using the indirect method.

Exercise 2

Cucudrulu Inc. reports income of $15,000. Its balance sheet shows the following changes:

1. accounts receivable increased by $6,000
2. inventory decreased $8,000
3. prepaid insurance decreased $1,000
4. accounts payable increased by $3,000
5. taxes payable decreased $2,000

Compute cash flows from operations using the indirect method.