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In 2017, Wild Corporation reported a net loss of \(70,000. Wild’s only net income adjustments were depreciation expense \)81,000, and increase in accounts receivable $8,100. Compute Wild’s net cash provided (used) by operating activities.

Short Answer

Expert verified

The net cash provided by operating activities is computed as $2,900.

Step by step solution

01

Definition of Accounts Receivables

Accounts Receivables are defined as the balance sheet items which show the balance of money due to business for goods or services sold.

02

Computation of net cash provided by operating activities

Particulars

Amount ($)

Amount ($)

Cash flows from Operating Activities

Net Loss

-$70,000

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation Expense

81,000

Increase in accounts receivables

-8,100

72,900

Net cash provided by operating activities

$2,900

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Most popular questions from this chapter

Question: The board of directors of Tirico Corp. declared cash dividends of \(260,000 during the current year. If dividends payable was \)85,000 at the beginning of the year and $90,000 at the end of the year, how much cash was paid in dividends during the year?

Springsteen Co. had the following activity in its most recent year of operations.

  1. Pension expense exceeds amount funded.
  2. Redemption of bonds payable
  3. Sale of the building at book value
  4. Depreciation
  5. Exchange of equipment for furniture
  6. Issuance of ordinary shares
  7. Amortization of intangible assets
  8. Purchase of treasury shares
  9. Issuance of bonds for land.
  10. Payment of dividends
  11. Increase in interest receivable on notes receivable
  12. Purchase of equipment.

Instructions Classify the items as (1) operating—add to net income, (2) operating—deduct from net income, (3) investing, (4) financing, or (5) significant non-cash investing and financing activities. Use the indirect method.

Under IFRS, significant non-cash transactions:

  1. are classified as operating, if they are related to income items.
  2. are excluded from the statement of cash flows and disclosed in a narrative form or summarized in a separate schedule.
  3. are classified as an investing or financing activity.
  4. are classified as an operating activity, unless they can be specifically identified with financing or investing activities.

Question: Your roommate is puzzled. During the last year, the company in which she is a stockholder reported a net loss of \(675,000, yet its cash increased \)321,000 during the same period of time. Explain to your roommate how this situation could occur.

Question: E23-13 (L02,3) (SCF—Direct Method) Brecker Inc., a greeting card company, had the following statements prepared as of December 31, 2017.

BRECKER INC.

COMPARATIVE BALANCE SHEET

AS OF DECEMBER 31, 2017 AND 2016


12/31/17

12/31/16

Cash

\(6,000

\)7,000

Accounts receivable

62,000

51,000

Short-term-debt (available for sale)

35,000

18,000

Inventory

40,000

60,000

Prepaid rent

5,000

4,000

Equipment

154,000

130,000

Accumulated depreciation – Equipment

(35,000)

(25,000)

Copyrights

46,000

50,000

Total assets

\(313,000

\)295,000

Account payable

\(46,000

\)40,000

Income tax payable

4,000

6,000

Salaries and wages payable

8,000

4,000

Short-term loans payable

8,000

10,000

Long-term loans payable

60,000

69,000

Common stock, \(10 par

100,000

100,000

Contributed capital, Common stock

30,000

30,000

Retained earnings

57,000

36,000

Total liability and stockholders equity

\)313,000

\(295,000


BRECKER INC.

INCOME STATEMENT

FOR THE YEAR ENDING DECEMBER 31, 2017

Sales revenue

\)338,150

Cost of goods sold

(175,000)

Gross profit

163,150

Operating expenses

(120,000)

Operating income

43,150

Interest expenses

\(11,400

Gain on sale of equipment

2,000

9,400

Income before taxes

33,750

Income tax expenses

6,750

Net income

\)27,000

Additional information:

1. Dividends in the amount of \(6,000 were declared and paid during 2017.

2. Depreciation expense and amortization expense are included in operating expenses.

3. No unrealized gains or losses have occurred on the investments during the year.

4. Equipment that had a cost of \)20,000 and was 70% depreciated was sold during 2017.

Instructions

Prepare a statement of cash flows using the direct method. (Do not prepare a reconciliation schedule.)

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