Question

Section C: Cash Flows from Operations The Golden Rams Company reported net income of $100,000 for 2020. Net income include gain of $6.000 on the sale of land and a loss on the sale of equipment of $10.000. Depreciation on fixed assets for the year was $15,000. Balances of select accounts at the end and beginning of the year are listed below. Balances 2020 2020 Ending Beginning $ 65,000 Cash $ 70,000 . 78,000 70,000 Accounts Receivable . 85,000 Inventories . 102,000 . Prepaid Rent . . 4,000 5,000 100,000 Land. 100,000 . Building and Equipment (net). 500,000 520,000 58,000 50,000 Accounts Payable Salaries Payable . 5,000 8,000 Bonds Payable. 175,000 150,000 Prepare the net cash flows from operating activities section of the statement of cash flows using the "indirect" method.

Answer 1

Answer:

Golden Rams Company Statement of Cash Flows (Partial) Particulars Amount Amount Cash flow from operating activities Net Income $ 100,000 Adjustments to reconcile net income: Depreciation Expense $ 15,000 Gain on sale of land $ -6,000 Loss on sale of equipment $ 10,000 $ (8,000) Changes in current operating assets and liabilities Less: Increase in Accounts Receivable (50,000 - 58,000) Less: Increase in Inventory (102,000 - 85,000) Add: Decrease in Prepaid Rent (5,000 - 4,000) $ (20,000) 1,000

Continuation of Above Answer:

$ 8,000 Add: Increase in Accounts Payable (58,000 - 50,000) Less: Decrease in Salaries Payable (5,000 - 8,000) $ (3,000) $ 3.000 (15,000 - 6,000 + 10,000 - 8,000 -20,000+ 1,000 + 8,000 - 3,000 Net cash flow from operating activities $ 97,000 Calculation (100,000 - 3,000)