Question

The independent cases are listed below that includes all items relevant to operating activities: Case A Case B Case C Sales revenue $ 71,000 $ 61,000 $ 102,000 Cost of goods sold 38,000 29,000 68,200 Depreciation expense 10,600 2,600 26,600 Salaries and wages expense 5,600 13,600 8,600 Net income 16,800 15,800 (1,400 ) Accounts receivable increase (decrease) (1,000 ) 4,600 3,600 Inventory increase (decrease) 2,600 0 (3,600 ) Accounts payable increase (decrease) 0 3,100 (1,000 ) Salaries and wages payable increase (decrease) 1,800 (2,600 ) 1,000 Compute cash flows from operating activities using the direct method. (Amounts to be deducted should be indicated with a minus sign.)

Answer 1

Answer:

                                                     Case A          Case B         Case C

Sales revenue                             $71,000         $61,000     $102,000

Cost of goods sold                      38,000           29,000        68,200

Depreciation expense                  10,600             2,600        26,600

Salaries and wages expense        5,600            13,600          8,600

Net income                                    16,800           15,800          (1,400)

Accounts receivable increase      (1,000)            4,600           3,600

Inventory increase                         2,600                  0            (3,600)

Accounts payable increase              0                  3,100          (1,000)

Wages payable increase                1,800           (2,600)          1,000

Cash flow Case A = $16,800 (net income) + $10,600 (depreciation) + $1,000 (accounts receivable decrease) - $2,600 (inventory increase) + $1,800 (wages payable increase) = $27,600

Cash flow Case B = $15,800 (net income) + $2,600 (depreciation) - $4,600 (accounts receivable increase) + $3,100 (accounts payable increase) - $1,800 (wages payable decrease) = $15,100

Cash flow Case C = -$1,400 (net income) + $26,600 (depreciation) - $3,600 (accounts receivable increase) + $3,600 (inventory decrease) + $1,000 (accounts payable increase) + $1,000 (wages payable increase) = $27,200