Michigan Auto Parts Company Uses the Indirect Method to Prepare

question 173

Essay

Michigan Auto Parts Company uses the indirect method to prepare its statement of cash flows.Refer to the following portion of the comparative balance sheet:
$\begin{array}{c}\text { Michigan Auto Parts Company }\\\text { Comparative Balance Sheet}\\\text { December 31, 2018 and 2017}\\\begin{array}{llll}&2019 & 2018 & \text { Increase/(Decrease) }\\\text { Cash } & \$ 42,000 & \$ 36,000 & \$ 6,000 \\\text { Accounts Receivable } & 62,000 & 70,000 & (8,000) \\\text { Merchandise Inventory } & 106,000 & 50,000 & 56,000 \\\text { PP\&E, net } & \underline{240,000} & \underline{180,000} & \underline{60,000} \\\text { Total Assets } & \$ 450,000 & \$ 336,000 & \$ 114,000\end{array}\end{array}$ Additional information provided by the company includes the following:
Equipment costing $104,000 was purchased for cash.
Equipment with a net book value of $20,000 was sold for $28,000.
Depreciation expense of $24,000 was recorded during the year.
Prepare the investing activities section of the statement of cash flows.

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