Diaz Company Had the Following Comparative Balance Sheet Information at the End

question 148

Essay

Diaz Company had the following comparative balance sheet information at the end of Year 2 and Year 1:
$\begin{array}{c} \text {Diaz Company}\\ \text { Comparative Balance Sheets}\\\begin{array}{lll}&\text { Year } 2 \\ \text { Cash } & \$ 30,000 \\ \text { Accounts receivable } & 48,000 \\ \text { Inventory } & 158,000 \\ \text {Prepaid insurance } & 10,000 \\\text { Property, plant and equipment } & 70,000 \\ \text { Accumulated depreciation } & (14,000) \\ \text { Total } & \$ 302,000 \\ \text { Acounts payable } & \$ 14,000 \\ \text { Bonds payable } & 90,000 \\ \text { Common stock } & 140,000 \\\text { Retained earnings } & 58,000 \\ & \$ 302,000 \\\end{array}\begin{array}{r}\text { Year } 1 \\ \$ 28,000 \\50,000 \\156,000 \\8,00 0 \\60,000 \\(10,000) \\ 292,000 \\ \$ 18,000\\120,000 \\120,000 \\34,000 \\ 292,000\end{array}\end{array}$
Diaz reported net income for Year 2 of $40,000.No property,plant,and equipment were disposed of during the year.Diaz uses the indirect method to prepare the statement of cash flows.
Using the indirect method,calculate Diaz's cash flow from operating activities for Year 2.

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Definitions:

Heat

A form of energy transferred between objects or systems due to a temperature difference, often perceived as warmth.

Argument By Analogy

making an argument based on the similarity between two situations or cases, suggesting that what applies to one should apply to the other.

Similarity

The state or fact of being similar; resemblance or likeness between persons, things, or ideas.

Property

A characteristic, quality, or trait belonging to a person or thing.