Question

How do you calculate is the Net cash flow provided by operations? Avatar Company uses the indirect method to prepare the statement of cash flows. Please refer to the following income statement Sales revenue $240,000 Interest revenue 1,000 Gain on sale of plant assets 4,000 Total revenues and gains $245,000 Cout of goods sold 110,000 Salary expense 45,000 Depreciation expense 12,000 Other operating expenses 23,000 Interest expense 1,000 Income tax expense 5,000 Total expenses $196,000 Net income (loss) $49.000 Other information provided: Current assets other than cash increase by $24,000 Current liabilities decrease by $1,000. How much is the Net cash flow provided by operations? A) 520,000 positive B) 575,000 positive C) $32,000 positive D) 582,000 positive How do you calculate the collections from customers if the Company uses the direct method for its statement of cash flow? Parmesan Com e s the direct method for its statement of cash flow. It reports the following information regarding the year 2013 From the income statement: Revenues $240,000 Cost of goods sold: $190,000 Operating expenses: 525,000 From the balance sheet Beginning balance Ending balance Accounts receivable $12,000 $15,000 Inventory $22,000 $18.000 Accounts payable $7,000 $12.000 Accrued liabilities $3.000 $1,200 On the state of cash flows, what amount will be shown for collections from customers A) 5237,000 B) $243,000 C) $240.000 D) 530,000

Answer 1

1) Calculate following

cash flow from operating activities
Net income	49000
Gain on sale of plant assets	-4000
Depreciation expense	12000
Increase current assets	-24000
Decrease current liabilities	-1000
Net cash provided by operation	32000

So answer is c) $32000 positive

2) Cash collection from customer = 12000+240000-15000 = 237000

So answer is a) $237000