Question

Hampton Company reports the following information for its recent calendar year. Income Statement Data Sales $71,000 Expenses Cost of goods sold 39,000 Salaries expense 8,000 Depreciation expense 7,000 Net income $17,000 Selected Year-End Balance Sheet Data Accounts receivable increase $9,000 Inventory decrease 3,000 salaries payable increase 1,000 Required: Prepare the operating activities section of the statement of cash flows for Hampton Company using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)

Answer 1

1) Calculation of Cash flow from Operating activities using Indirect method

Cash flow from Operating activities:
Net income		$17000
Adjustments to reconcile net cash flow from operating activities from net income
Depreciation expense	7000
Accounts receivable increases	-9000
Inventory decreases	3000
Salaries payable increases	1000	2000
Net cash flow from operating activities		$19000

2)

Cash flow from Investing activities:
Sales of equipment (81000-36000)	$45000
Purchase of new truck	-100000
Sale of land	400000
Sale of long-term investments	94900
Net cash flow from investing activities	$439900