Maryland Company Had Net Income of $21,850 for the Year

question 47

Essay

Maryland Company had net income of $21,850 for the year ended December 31,2015.Additional information from the income statement follows:
$$\begin{array} { l l } \text { Depreciation expense } & \$ 8,400 \\\text { Intersit expense } & 3,900 \\\text { Income tax expense } & 5,700\end{array}$$
The company also reported the following balances:
$$\begin{array} { l l l } & \text { December } & \text { December } \\& \mathbf { 3 1 , 2 0 1 4 } & \mathbf { 3 1 , 2 0 1 5 } \\\text { Accounts receivable } & \$ 10,000 & \$ 11 , \mathrm {~B} 00 \\\text { Accounts payable } & \$ 20,000 & \$ 23,200 \\\text { Income taxes payable } & \$ 22,000 & \$ 21,300 \\\text { Inventory } & \$ 30,000 & \$ 25,000\end{array}$$
Required:
Prepare the operating activities section of the statement of cash flows for the year ended December 31,2015.Use the indirect method.

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Definitions:

Finished Goods

Refers to products that have completed the manufacturing process but have not yet been sold to customers.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold in a company, including materials and labor.

Customer Profitability

An analysis to determine the financial contribution brought by a customer through their purchases minus the costs of servicing them.

Product Costs

The costs directly attributable to the creation of products, including materials, labor, and manufacturing overhead.