Use the following information from Chocolate Company's financial statements:IncomeBalanceStatementSheetSales$105,700Cost of Goods Sold(65,000)Salares Expense(19,000)Depreciation Expense(12,000)Net Income$9,700Accounts Receivable Increase$2,100Merchandise Invendory1,800DecreaseSalaries Payable Increase850Determine operating net cash flows (indirect method).

Answered: Determine operating net cash flows…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter11: The Statement Of Cash Flows

Section: Chapter Questions

Problem 12MCQ: Smoltz Company reported the following information for the current year: cost of goods sold,...

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Question

Use the following information from Chocolate Company's financial statements:
Income
Balance
Statement
Sheet
Sales
$105,700
Cost of Goods Sold
(65,000)
Salares Expense
(19,000)
Depreciation Expense
(12,000)
Net Income
$9,700
Accounts Receivable Increase
$2,100
Merchandise Invendory
1,800
Decrease
Salaries Payable Increase
850
Determine operating net cash flows (indirect method).

Expert Solution

Step 1

Statement of cash flows: It is one of the financial statements that shows the cash and cash equivalents of a company for a particular period. It determines the net changes in cash through reporting the sources and uses of cash due to the operating, investing, and financing activities of a company.

Indirect method: Under this method, the following amounts are to be adjusted from the Net Income to calculate the net cash provided from operating activities.

Cash flows from operating activities: These are the cash produced by the normal business operations.

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