Use the Following Income Statement and Information About Selected Current

question 116

Essay

Use the following income statement and information about selected current assets and current liabilities to calculate the net cash provided or used by operating activities using the indirect method.
PULLMAN COMPANY
Income Statement
For Year Ended December 31, 20X2
$$\begin{array} { l | r | r } \hline \text { Sales } & & \$ 180,000 \\\hline \text { Cost of goods sold } & & 104,000 \\\hline \text { Gross profit from sales } & & \$ 76,000 \\\hline \text { Operating expenses: } & & \\ \hline \text { Salaries and wages expense } & \$ 25,000& \\\hline \text { Depreciation expense } & 7,000 & \\\hline \text { Rent expense } & 7,200 \\\hline \text { Interest expense } &1,900 & \underline { 41,100 } \\\hline \text { Income from operations } & & \$ 34,900 \\\hline \text { Loss on sale of land } & & 3 , 5 0 0 \\\hline \text { Net income } & & \$ 31,400 \\\hline\end{array}$$ Selected beginning and ending balances of current asset and current liability accounts, all of which relate to operating activities, are as follows:
$$\begin{array} { l | r | r } &{ \text { Balance } } \\\hline & \text { Dec. 31, 20X2 } & \text { Dec. 31, 20X1 } \\\hline \text { Accounts receivable } & \$ 27,600 & \$ 24,000 \\\hline \text { Merchandise inventory } & 22,300 & 20,000 \\\hline \text { Prepaid rent } & 550 & 400 \\\hline \text { Accounts payable } & 27,100 & 26,000 \\\hline \text { Salaries and wages payable } & 10,400 & 9,000 \\\hline \text { Interest payable } & 300 & 250\end{array}$$

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Definitions:

Legislative History

The records and documents created during the enactment process of a law, which can include bill drafts, committee reports, and legislative debates, used for interpreting legislative intent.

Ethical Reason

A justification for an action or decision based on moral principles and values.

Equitable Remedy

A court-ordered action that requires a party to take specific steps to correct a wrong, including injunctions and specific performance, distinguished from financial compensation.

Specific Performance

A contract remedy whereby the defendant is ordered to perform according to the terms of his contract.