Brooks Company Reported Net Income of $40,000 Which Included Depreciation

question 109

Short Answer

Brooks Company reported net income of $40,000 which included depreciation expense and depletion expense of $21,000 and $18,000,respectively.The following changes also occurred during 2009:
$$\begin{array} { l r l } \text { Inventory } & \$ 10,000 & \text { decrease } \\\text { Accounts payable } & 5,000 & \text { increase } \\\text { Notes payable (long-term) } & 15,000 & \text { decrease } \\\text { Income tax payable } & 7,000 & \text { increase } \\\text { Accounts receivable } & 10,000 & \text { increase }\end{array}$$ Calculate cash flows from operating activities.

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Definitions:

Investment in Brinkman Corp.

The purchase of equity or debt securities of Brinkman Corporation as a form of investment, expecting to earn returns.

Undervalued Equipment

Equipment whose market price is less than its intrinsic value or original cost, indicating it might have been underestimated in financial records.

Customer List

An asset representing the information and details of consumers who have transacted with or shown interest in a company's products or services.

Net Income

A measure of a company's profitability, calculated as revenue minus costs of goods sold, expenses, taxes, and other deductions, over a specific period.