Question

Great Lakes Manufacturing Inc. comparative Statement of Financial Position at December 31in (000)'s 20X5 20X4 Cash $ 5,100 $ 4,800 Accounts Receivable $ 9,010 $ 6,100 Inventory $ 10,400 $ 14,000 Prepaid Expenses $ 1,950 $ 1,020 Equipment $ 58,500 $ 59,900 Accumulated Depreciation - equipment ($33,100) ($32,000) Total Assets $ 51,860 $ 53,820 Account Payable $ 7,000 $ 11,400 Interest Payable $ 350 $ 110 Income taxes payable $ 650 $ 500 Dividends Payable $ 2,400 $ 3,200 Long-term Notes Payable $ 17,500 $ 17,000 Common shares $ 22,000 $ 20,000 Retained Earnings $ 1,960 $ 1,610 Total Liabilities & Shareholders' Equity $ 51,860 $ 53,820 Great Lakes Manufacturing Inc. Income Statement Year Ended December 31, 20X5 in (000)'s Sale $130,000 Cost of goods sold $ 97,000 Gross Profit $ 33,000 Operating Expenses $30,000 Gain on Sale of equipment $ (1,000) $ 29,000 Profit from Operations $ 4,000 Other expenses Interest Expense $ 200 Profit before Income Tax $ 3,800 Income Tax Expense $ 1,550 Profit $ 2,250 Additional Information: - Operating expenses include depreciation expense of $3,500,000 - Accounts Payable related to the purchase of inventory - Equipment that cost $3,900,000 was sold at a gain of $1,000,000 - New equipment was purchased during the year for $2,500,000 - Dividends declared and paid in 20X5 totaled $1,900,000 - Common shares were sold for $2,000,000 cash - Interest payable in 20X5 was $240,000 greater than interest payable in 20X4 By how much the change in Accounts Payable has generated or (used) cash when the indirect cash flow method is used?

$10,400

None of the other alternatives are correct

($4,400)

$4,400

$14,000

Answer 1

Decrease in accounts payable (use of cash) = 7000-11400

                              =- 4400

Correct option is "C"