Depreciation and the Cash Flow Statement
Oakeson Company is a manufacturing firm. Work in process and finished goods inventories for December 31, 2008, and December 31, 2007, follow:
|
Dec. 31, 2008 |
Dec. 31, 2007 |
|
|
Work in process inventory (including depreciation) |
$70,000 |
$75,000 |
|
Finished goods inventory (including depreciation) |
123,000 |
110,000 |
Depreciation is a major portion of Oakeson’s overhead, and the inventories listed above include depreciation in the following amounts:
|
Dec. 31, 2008 |
Dec. 31, 2007 |
|
|
Depreciation included in work in process inventory. |
$15,000 |
$12,500 |
|
Depreciation included in finished goods inventory |
26,000 |
29,000 |
Oakeson’s net income for 2008 was $90,000. Cost of goods sold for the year included $22,000 in depreciation.
Instructions: Compute net cash flow from operating activities for Oakeson Company for 2008. Assume that the levels of all current assets (except for inventories) and all current liabilities were unchanged from beginning of year to end of year.