Use the Following Income Statement and Information About Selected Current

question 48

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 direct method.
$\begin{array}{c}\text {PETERS COMPANY}\\\text {Income Statement}\\\text {For Year Ended December 31, 2013}\\\begin{array}{|l|r|r|}\hline\text { Sales } & & \$ 180,000 \\\hline \text { Cost of goods sold } & & 104,000 \\\hline \text { Gross profit from sales } & & \$ 76,000 \\\hline \text { Operating expenses: } & \\\hline \text { Salaries and wages expense } & \$ 25,000 \\\hline \text { Depreciation expense } & 5,000 \\\hline \text { Rent expense } & 7,200 \\\hline \text { Interest expense } & 1,900&39,100\\\hline \text { Income from operations } & & \$ 36,900 \\\hline \text { Gain on sale of land } & & \underline{2,000} \\\hline \text { Net income } & & \underline{38,900} \\\hline\end{array}\end{array}$

Selected beginning and ending balances of current asset and current liability accounts,all of which relate to operating activities,are as follows:
$\begin{array}{c} \quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\text { Balance } \\ \begin{array}{|l|r|r|}\hline &\text {Dec. 31, 2013} &\text { Dec, 31, 2012} \\\hline \text { Accounts receivable } & \$ 27,600 & \$ 24,000 \\\hline \text { Merchandise inventory } & 18,200 & 20,000 \\\hline \text { Prepaid rent } & 550 & 400 \\\hline \text { Accounts payable } & 27,100 & 31,000 \\\hline \text { Salaries and wages payable } & 10,400 & 9,000 \\\hline \text { Interest payable } & 300 & 250\\\hline\end{array}\end{array}$

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Definitions:

Inaccurate Assertions

Statements or claims that are not based on facts or truth, often leading to misunderstandings or misinformation.

Innuendo

An indirect or subtle, usually derogatory implication in expression; an insinuation.

Comparison Group

In research, a group of subjects used as a benchmark to measure the effects or outcomes of a specific variable or intervention in another group.

Exposed

Revealed or disclosed, often something that was previously hidden or secret.