1. If net profit is $47,025; depreciation is $2,200; accounts receivable increases $5,056;accounts payable increases $4,673; and inventory declines $850; what is the operatingcash flow for the month using the indirect method?Net profitadd depreciationAccounts receivableAccounts payableInventoryOperating cash flow2. As a business owner looking at this operating cash flow statement using the indirectmethod, what might you want to further investigate? Why?Answer:

Solution Given Net profit 47025 Depreciation 2200 Accounts receivables increases…

Answered: 1. If nét profit is $47,025;…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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1. Use the above information to prepare a statement of cash flows for the current year using the indirect method. MONTGOMERY INCORPORATED Income Statement For Current Year Ended December 31 Sales $45,575 Cost of goods sold 18,950 Gross profit 26,625 Salaries expense 5,550 Depreciation expense 7,200 Income before taxes 13,875 Income tax expense 3,375 Net income $10,500 Additional Information on Current-Year Transactions a. No dividends are declared or paid. b. Issued additional stock for $10,000 cash. c. Purchased equipment for cash; no equipment was sold.
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