The income statement of Carla Company is shown below. Carla Company Income Statement For the Year Ended December 31, 2025 Sales revenue Cost of goods sold Beginning inventory Purchases Goods available for sale Ending inventory Cost of goods sold Gross profit Operating expenses Selling expenses Administrative expenses Net income Additional information: $1,890,000 4,410,000 6,300,000 1,590,000 450,000 700,000 $6.930,000 4,710,000 2,220,000 1,150,000 $1,070,000 1. Accounts receivable decreased $370,000 during the year. 2 Prepaid expenses increased $160,000 during the year. Accounts payable to suppliers of merchandise decreased $290,000 during the year.

The income statement of Carla Company is shown below. Carla Company Income Statement For the Year Ended December 31, 2025 Sales revenue Cost of goods sold Beginning inventory Purchases Goods available for sale Ending inventory Cost of goods sold Gross profit Operating expenses Selling expenses Administrative expenses Net income Additional information: $1,890,000 4,410,000 6,300,000 1,590,000 450,000 700,000 $6.930,000 4,710,000 2,220,000 1,150,000 $1,070,000 1. Accounts receivable decreased $370,000 during the year. 2 Prepaid expenses increased $160,000 during the year. Accounts payable to suppliers of merchandise decreased $290,000 during the year.

Name: Prepare the operating activities section of the statement of cash flo
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Description: Prepare the operating activities section of the statement of cash flows using the direct method.CARLA COMPANYPartial Statement of Cash FlowsFor the Year Ended December 31, 2025Cash Flows from Operating ActivitiesCash Receipts from CustomersCash Paym

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.

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Question

Prepare the operating activities section of the statement of cash flows using the direct method.
CARLA COMPANY
Partial Statement of Cash Flows
For the Year Ended December 31, 2025
Cash Flows from Operating Activities
Cash Receipts from Customers
Cash Payments for Operating Expenses
Cash Payments to Suppliers
Net Cash Provided by Operating Activities
1100000
5010000
7300000

Administrative expenses
Net income
Additional information:
AWN2
The income statement of Carla Company is shown below.
Carla Company
Income Statement
For the Year Ended December 31, 2025
Sales revenue
Cost of goods sold
Beginning inventory
Purchases
Goods available for sale
Ending inventory
Cost of goods sold
Gross profit
Operating expenses
Selling expenses
2.
3.
5.
$1,890,000
4,410,000
6,300,000
1,590,000
450,000
700,000
$6.930,000
1. Accounts receivable decreased $370,000 during the year.
Prepaid expenses increased $160,000 during the year.
Accounts payable to suppliers of merchandise decreased $290,000 during the year.
Accrued expenses payable decreased $90,000 during the year.
Administrative expenses include depreciation expense of $50,000.
4,710,000
2,220,000
1,150,000
$1,070,000
Prepare the operating activities section of the statement of cash flows using the direct method.

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