Avatar Company Uses the Indirect Method to Prepare the Statement

question 28

Essay

Avatar Company uses the indirect method to prepare the statement of cash flows. Please refer to the following income statement:
$$\begin{array} { | l | r | r | } \hline \text { Sales revenue } & \$ 240,000 & \\\hline \text { Interest revenue } & 1,000 & \\\hline \text { Gain on sale of plant assets } & 4,000 & \\\hline \text { Total revenues and gains } & & \$ 245,000 \\\hline \text { Cost of goods sold } & 110,000 & \\\hline \text { Salary expense } & 45,000 & \\\hline \text { Depreciation expense } & 12,000 & \\\hline \text { Other operating expenses } & 23,000 & \\\hline \text { Interest expense } & 1,000 & \\\hline \text { Income tax expense } & 5,000 & \\\hline \text { Total expenses } & & \$ 196,000 \\\hline \text { Net income/(loss) } & & \$ 49,000 \\\hline\end{array}$$
Other information provided:
• Current assets other than cash increase by $24,000.
• Current liabilities decrease by $1,000.
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Please prepare the operating activities section of the statement of cash flows using the following format:
$$\begin{array} { | l | l | l | } \hline \text { Operating activities: } &\quad\quad &\quad\quad \\\hline \text { Net income } & & \\\hline \text { Adjustments } & & \\\hline & & \\\hline & & \\\hline & & \\\hline \text { Net cash from operating activities } & & \\\hline\end{array}$$

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