Exercise 8 (a):
The Meta company uses indirect method for preparing its statement of cash flows. It reported a net income of $100,000 for the year 2016.
During the year 2016, the working capital accounts were changed as follows:
- Increase in accounts receivable: $22,000
- Increase in accounts payable: $18,600
- Increase in inventory: $14,800
- Decrease in non-trade notes payable: $30,000
- Increase in available for sale securities: $32,000
The depreciation expense was $34,000 for the year 2016.
Required: Compute net cash provided (used) by operating activities using indirect method.
The changes in the following working capital items have not been considered in above computation:
- Decrease in non-trade note payable: Any cash flow relating to non-trade notes payable is reported in financing activities section of statement of cash flows.
- Increase in available for sale securities: Any cash flow relating to available for sale securities is reported in investing activities section of statement of cash flows.
Exercise 8 (b):
The Beta company provides only the following information for the year 2016:
- Net loss: $$35,000
- Increase in accounts receivable: $4,050
- Depreciation expense: $42,000
Required: Compute net cash provided (used) by operating activities of Beta company using indirect method.