一. The net income reported on the income statement for the current year was $21000.Depreciation was $25000 .Accounts receivable and inventories decreased by $5000 and $15000 ,respectively.Prepaid expenses and accounts payable increaded,respectively,by$500 and$4000.How much cash was provided by operating activities?
- MajestasLv 57 年前最佳解答
You will need to work out your own answer:(1) The first step is to open 2 separate T-accounts for (a) a nominal account for combined COST OF SALES and INCOME STATEMENT account, and a personal account (combined account for A/C RECEIVALEL, PREPAID EXPENSES and A/C PAYABLES).(2) Write up your nominal T-account: decrease of inventories of $15,000 is a debit. Insert depreciation $25,000, and net income $21,000 both as debits; and you will find the (sales-purchases) as a balancing figure XX in the COS T-account.(3) In the combined personal T-account, post the decrease of $5,000 a/c receivable as a credit, and $500 increase in prepaid expense, and the $4,000 increase in a/c payable as credit; credit this account with XX you found in step (2). The balancing is figure YY, is the amount paid by the operating activities (inventories, creditor & debtors).
2013-07-19 16:25:55 補充：
paragrahp (3) should be:
"debit this [personal] account with the XX you found in step (2). " (not credit)
Note XX should be a debit because XX (sale-purchases-expenses) is normally a credit (if you need to make a profit) in the nominal account (combined COS and Income Statement).