Garton Company Had Net Income of $195000 in 2016

question 139

Essay

Garton Company had net income of $195000 in 2016. Depreciation expense for the year is $50000. During the year Accounts Receivable increased $8000 and Prepaid Expenses decreased $1000. The company also sold equipment at a loss of $3000.
Instructions
Calculate net cash flows from operating activities using the indirect method.

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Definitions:

Variable Manufacturing Overhead

Costs of manufacturing that vary directly with the level of production, aside from direct labor and materials.

Fixed Manufacturing Overhead

Indirect production costs that remain constant regardless of the volume of production, such as factory rent and salaries of managers.

Direct Labour

The labor costs directly attributable to the production of goods or services, typically wages paid to workers who are directly involved in manufacturing.

Direct Materials

Raw materials that are directly traceable to the production of specific goods or services and are an integral part of the finished product.