(Supplement A) Comparing Cash Flows from Operating Activities (Direct and Indirect Methods)
Alpha Company's accountants have just completed the income statement and balance sheet for the year and have provided the following information (dollars in thousands):
INCOME STATEMENT | ||
Sales revenue |
| $20,800 |
Expenses |
| |
Cost of goods sold | $9,030 | |
Depreciation expense | 2,900 | |
Salaries expense | 4,070 | |
Rent expense | 2,800 | |
Insurance expense | 900 | |
Utilities expense | 720 | |
Interest expense on bonds | 600 | |
Loss on sale of investments | 650 | 21,670 |
Net loss | $(870) | |
SELECTED BALANCE SHEET ACCOUNTS | ||
2012 | 2013 | |
Merchandise inventory | $65 | $84 |
Accounts receivable | 530 | 440 |
Accounts payable | 212 | 245 |
Salaries payable | 23 | 31 |
Rent payable | 8 | 4 |
Prepaid rent | 7 | 4 |
Prepaid insurance | 7 | 17 |
Other Data:
The company issued $20,000, 8 percent bonds payable during the year.
Required:
1. Prepare the cash flows from operating activities section of the statement of cash flows using the direct method.
2. Prepare the cash flows from operating activities section of the statement of cash flows using the indirect method.
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