Question

CRUZ, INC.

Income Statement

For Year Ended December 31, 2017

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \(488,000

Cost of goods sold . . . . . . . . . . . . . . . . . . 314,000

Gross profit . . . . . . . . . . . . . . . . . . . . . . . 174,000

Operating expenses

Depreciation expense . . . . . . . . . . . . . \)37,600

Other expenses . . . . . . . . . . . . . . . . . . 89,100 126,700

Income before taxes . . . . . . . . . . . . . . . . 47,300

Income taxes expense . . . . . . . . . . . . . . . 17,300

Net income . . . . . . . . . . . . . . . . . . . . . . . . \( 30,000

CRUZ, INC.

Comparative Balance Sheets

December 31, 2017

2017 2016

Assets

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \) 94,800 \( 24,000

Accounts receivable, net . . . . . . . . . . . . . . . . . . . 41,000 51,000

Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85,800 95,800

Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . 5,400 4,200

Total current assets . . . . . . . . . . . . . . . . . . . . . . . 227,000 175,000

Furniture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109,000 119,000

Accum. depreciation—Furniture . . . . . . . . . . . . . (17,000) (9,000)

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \)319,000 \(285,000

Liabilities and Equity

Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . \) 15,000 \( 21,000

Wages payable . . . . . . . . . . . . . . . . . . . . . . . . . . 9,000 5,000

Income taxes payable . . . . . . . . . . . . . . . . . . . . . 1,400 2,600

Total current liabilities . . . . . . . . . . . . . . . . . . . . . 25,400 28,600

Notes payable (long-term) . . . . . . . . . . . . . . . . . 29,000 69,000

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 54,400 97,600

Equity Common stock, \)5 par value . . . . . . . . . . . . . . . 229,000 179,000

Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . 35,600 8,400

Total liabilities and equity . . . . . . . . . . . . . . . . . . \(319,000 \)285,000

Required Use the indirect method to prepare the cash provided or used from operating activities section only of the statement of cash flows for this company.

Short answer

The net cash provided by operating activities is computed as $83,200

Step-by-step solution

Meaning of Operating Activities

Operating activities refer to all of the activities that are related to the day-to-day business operations, and these activities include sales, purchases, and production.

Computation of cash flow from operating activities

Particulars	Amount ($)	Amount ($)
Net Income		30,000
Add/less: Adjustment to reconcile net income to net cash
Depreciation	37,600
Changes in working capital
Decrease in accounts receivables	10,000
Increase in wages payable	4,000
Decrease in Inventory	10,000
Increase in prepaid expenses	(1,200)
Decrease in accounts payable	(6,000)
Decrease in income taxes payable	(1,200)	53,200
Net cash provided by Operating activities		83,200