Question

Use the following information to determine this company’s cash flows from operating activities using the indirect method.

MOSS COMPANY

Selected Balance Sheet Information

December 31, 2017 and 2016

2017 2016

Current assets

Cash . . . . . . . . . . . . . . . . . . . . . . . \(84,650 \)26,800

Accounts receivable . . . . . . . . . . 25,000 32,000

Inventory . . . . . . . . . . . . . . . . . . . 60,000 54,100

Current liabilities

Accounts payable . . . . . . . . . . . . 30,400 25,700

Income taxes payable . . . . . . . . . 2,050 2,200

MOSS COMPANY

Income Statement

For Year Ended December 31, 2017

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . \(515,000

Cost of goods sold . . . . . . . . . . . . . . . . . 331,600

Gross profit . . . . . . . . . . . . . . . . . . . . . . 183,400

Operating expenses

Depreciation expense . . . . . . . . . . . . \) 36,000

Other expenses . . . . . . . . . . . . . . . . . 121,500 157,500

Income before taxes . . . . . . . . . . . . . . . 25,900

Income taxes expense . . . . . . . . . . . . . . 7,700

Net income . . . . . . . . . . . . . . . . . . . . . . . $ 18,200

Short answer

The Net cash provided by operating activities is computed as $59,850.

Step-by-step solution

Meaning of Cash Flow from Operating Activities

The cash flow from operating activities shows the amount of money a company receives or pays from its day-to-day or regular business activities.

Computation of the company’s cash flow by operating activities

Particulars	Amount ($)	Amount ($)
Net Income		18,200
Adjustment to reconcile net income to net cash
Depreciation	36,000
Changes in working capital
Decrease in accounts receivables	7,000
Increase in Inventory	(5,900)
Increase in accounts payable	4,700
Decrease in income taxes payable	(150)	41,650
Net cash provided by Operating activities		59,850