Budget Auto Parts Company Uses the Indirect Method to Prepare $\begin{array}{c} \text { Budget Company} &\\ \text { Income Statement } &\\ \text { Year Ended December 31, 2017 } &\end{array}$

question 106

Essay

Budget Auto Parts Company uses the indirect method to prepare the statement of cash flows.Refer to the following income statement:
$\begin{array}{c} \text { Budget Company} &\\ \text { Income Statement } &\\ \text { Year Ended December 31, 2017 } &\end{array}$
$\begin{array}{ll}\text { Sales Revenue } & \$ 360,000 \\\text { Interest Revenue } & 1,500 \\\text { Gain on Sale of Plant Assets } & \underline{6,000}\\\text { Total Revenues and Gains } &&\$367,500 \\\text { Cost of Goods Sold } & 165,000 \\\text { Salary Expense } & 67,500 \\\text { Depreciation Expense } & 18,000 \\\text { Other Operating Expenses } & 34,500\\\text { Interest Expense } & 1,500 \\\text { Income Tax Expense } & \underline{7,500} \\\text { Total Expenses } &&\underline{294,000} \\\text { Net Income (Loss) } &&\underline{\$73,500}\end{array}$ Additional information provided by the company includes the following:
Current assets other than cash increase by $36,000.
Current liabilities decrease by $1,500.
Prepare the operating activities section of the statement of cash flows.

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Definitions:

Present

The current moment in time, often used as a reference point in discussions about time value of money.

Compounding

The process by which an investment generates earnings from previous earnings, leading to the exponential growth of the investment value over time.

Future Value

The value of an investment at a specific date in the future, accounting for factors such as interest rates and compounding.

Present Value

The contemporary monetary value of forthcoming sums or cash flow instances, considering a chosen rate of return.