Use the Following Income Statement and Information About Selected Current

question 213

Essay

Use the following income statement and information about selected current assets and current liabilities for Kimberline Industries to calculate the net cash provided or used by operating activities using the indirect method.
$\begin{array}{c}\text {KIMBERLINE INDUSTRIES}\\\text {Income Statement}\\\text {For Year Ended December \( 31,20 \mathrm{X} 1 \)}\\\begin{array}{|l|l|l|}\hline \text { Sales } & & \$ 280,000 \\\hline \text { Cost of goods sold } & & 124,000 \\\hline \text { Gross profit from sales } & & \$ 156,000 \\\hline \text { Operating expenses: } & \\\hline \text { Salaries and wages expense } & \$ 35,000 \\\hline \text { Depreciation expense } & 11,00 \\\hline \text { Rent expense } & 27,200 \\\hline \text { Interest expense } & 3,900&77,100 \\\hline \text { Income from operations } & & \$ 78,900 \\\hline \text { Loss on sale of land } & & 4,700 \\\hline \text { Net income } & & \$ 74,200\\\hline\end{array}\end{array}$
Increases and decreases of current asset and current liability accounts,all of which relate to operating activities,are as follows:
$$\begin{array} { | l | r | } \hline & \text { Change } \\\hline \text { Accounts receivable increase } & \$ 3,600 \\\hline \text { Merchandise inventory decrease } & 1,700 \\\hline \text { Accounts payable increase } & 1,100 \\\hline \text { Salaries and wages payable decrease } & 2,600 \\\hline\end{array}$$

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Definitions:

EOQ Model

The Economic Order Quantity model calculates the optimal order size to minimize total inventory costs, including holding and ordering costs.

Order Policy

Guidelines established by a company to determine minimum inventory levels, reorder points, and order quantities to manage inventory effectively.

Basic EOQ Model

The Economic Order Quantity model, a formula used to determine the optimal quantity of inventory to order, minimizing total inventory costs.