Prepare the operating activities section—indirect method . (LO 4), AP The income
ID: 2457153 • Letter: P
Question
Prepare the operating activities section—indirect method.
(LO 4), AP
The income statement of Paxson Company is presented here.
PAXSON COMPANY
Income Statement
For the Year Ended November 30, 2014
Beginning inventory
Purchases
4,400,000
Goods available for sale
Ending inventory
1,600,000
4,700,000
Selling expenses
Administrative expenses
700,000
1,150,000
$1,750,000
Additional information:
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Instructions
Prepare the operating activities section of the statement of cash flows for the year ended November 30, 2014, for Paxson Company, using the indirect method.
Net cash provided $1,940,000
PAXSON COMPANY
Income Statement
For the Year Ended November 30, 2014
Sales revenue $7,600,000 Cost of goods soldBeginning inventory
$1,900,000Purchases
4,400,000
Goods available for sale
6,300,000Ending inventory
1,600,000
Total cost of goods sold4,700,000
Gross profit 2,900,000 Operating expensesSelling expenses
450,000Administrative expenses
700,000
1,150,000
Net income$1,750,000
Explanation / Answer
Paxson Company
Statement of cash flows for the year ended November 30, 2014
Particulars Amount($)
Net Income 1750000
Adjustments:
Depreciation 110000
add : accounts receivable 380000
Inventory 300000
less: Prepaid expenses (150000)
Accounts payable (350000)
Accrued expenses (100000)
Net cash flow from operating activities 1940000.