Assume that the facts remain the same except that the business doesn’t record depreciation expense in the year. Instead, it leases all its fixed assets and pays rent. The rent expense for the year is $145,000. Determine its cash flow from operating activities for the year. Present your answer for reporting cash flow from operating activities according to the indirect format
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Cash Flow from Operating Activities |
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|
Net Income |
$405,000 |
|
|
Accounts receivable increase |
($35,000) |
|
|
Inventory increase |
($45,000) |
|
|
Prepaid expenses increase |
($15,000) |
|
|
Depreciation expense |
$191,000 |
|
|
Accounts payable increase |
$35,000 |
|
|
Accrued expenses payable increase |
$40,000 |
$576,000 |
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Cash Flow from Investing Activities |
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|
Capital expenditures |
($425,000) |
|
|
Cash Flow from Financing Activities |
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|
Short-term notes payable increase |
$125,000 |
|
|
Long-term notes payable increase |
$125,000 |
|
|
Issue of capital stock |
$50,000 |
|
|
Cash dividends to shareowners |
($250,000) |
$50,000 |
|
Increase in cash during year |
$201,000 |
|
|
Beginning cash balance |
$700,000 |
|
|
Ending cash balance |
$901,000 |