Question

Exercise 23-3

The income statement of Nash Company is shown below.

NASH COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2017
Sales revenue				$6,980,000
Cost of goods sold
Beginning inventory		$1,850,000
Purchases		4,580,000
Goods available for sale		6,430,000
Ending inventory		1,570,000
Cost of goods sold				4,860,000
Gross profit				2,120,000
Operating expenses
Selling expenses		410,000
Administrative expenses		760,000		1,170,000
Net income				$950,000

Additional information:

1.		Accounts receivable decreased $300,000 during the year.
2.		Prepaid expenses increased $170,000 during the year.
3.		Accounts payable to suppliers of merchandise decreased $260,000 during the year.
4.		Accrued expenses payable decreased $120,000 during the year.
5.		Administrative expenses include depreciation expense of $70,000.

Prepare the operating activities section of the statement of cash flows for the year ended December 31, 2017, for Nash Company, using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Answer 1

NASH COMPANY
Statement of Cash Flows (Partial)
For the year ended December 31, 2017
	Amount ($)	Amount ($)
Cash flows from operating activities;
Net Income		950,000
Adjustments to reconcile net income to Net cash provided by operating activities
Add: Depreciation Expenses	70,000
Add: Decrease in Accounts Receivables	300,000
Less: Increase in Prepaid Expenses	-170,000
Less: Decrease in Accounts Payable	-260,000
Less: Decrease in Accrued Expense Payable	-120,000	-180,000
Net cash provided by operating activities		770,000