E 13-25 Cash flows from operations (Direct Method) 1 answer below »

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E 13-25 Cash flows from operations (Direct Method)

E 13-25 Neil brown is the proprietor of a small company. The results of operations for last year are shown, along with selected balance sheet data. From the info, determing the amount of net cash flows provided from operations, using the direct method. After completing, show how the amount of net cash flows from operating activities would be calculated using the indirect method.

Sales revenue $510,000

Cost of goods sold 320,000

Gross Margin $190,00

Operating expenses

Wages expense 75,000

Utilities expense 2,500

Rent expense 35,400

Insurance expense 6,900 $119,800

Net income 70,200

Beginning of year End of year

Accounts receivable (net) $42,000 $39,000

Inventory 38,000 39,000

Prepaid Insurance 2,200 1,800

Accounts payable 16,000 19,000

Wages payable 10,000 8,800

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