Question

please help

Majestic Travel Services, Inc. Comparative Balance Sheets December 31, 2017 and 2016 Assets 2017 2016 $ Current assets: Cash Accounts receivable Inventory Prepaid insurance Total current assets 45,000 $ 79.000 58.000 9,000 13,000 82.000 21.000 10,000 $ 191,000 $ 126,000 Print Print | Done Done

Answer 1

Answer -

Majestic Travel Services, Inc.
Statement of Cash Flows-Operating Activities Section (Indirect Method)
For the Year Ended December 31, 2017
Operating Activities:
Net income		$39000
Adjustments to reconcile net income to cash basis:
Depreciation expense	$6000
Loss on sale of land	$3300
Decrease in accounts receivable	$3000
Increase in inventory	($37000)
Decrease in prepaid insurance	$1000
Decrease in accounts payable	($4000)
Increase in wages payable	$18000
Increase in interest payable	$2000
Increase in income tax payable	$2000	($5700)
Net cash provided by operating activities		$33300

Calculation:

1. Depreciation expense:

= Accumulated depreciation (2017) - Accumulated depreciation (2016)

= $22000 - $16000

= $6000

2. Loss on sale of land:

Carrying value of land sold = Beginning balance - Ending balance

= $118000 - $109000

= $9000

Loss on sale of land = Carrying value of land sold - Sale value of land

= $9000 - $5700

= $3300

3. Decrease in accounts receivable:

= Beginning balance - Ending balance

= $82000 - $79000

= $3000

4. Increase in inventory:

= Ending balance - Beginning balance

= $58000 - $21000

= $37000

5. Decrease in Prepaid insurance:

= Beginning balance - Ending balance

= $10000 - $9000

= $1000

6. Decrease in accounts payable:

= Beginning balance - Ending balance

= $32000 - $28000

= $4000

7. Increase in wages payable:

= Ending balance - Beginning balance

= $36000 - $18000

= $18000

8. Increase in interest payable:

= Ending balance - Beginning balance

= $15000 - $13000

= $2000

9. Increase in income tax payable:

= Ending balance - Beginning balance

= $8000 - $6000

= $2000