ACC – Norrington Trading Co., (P-05-27)

05-27

Name:
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Computation of Effects of Adjustments
Sales
Cost of goods sold
Depreciation expense
Salaries expense
Interest expense
Income taxes expense
Other expenses
Net income

(a)

Direct Method
Operating activities:
Cash collected from customers
Cash paid for inventory
Cash paid for salaries
Cash paid for interest
Cash paid for income taxes
Cash paid for other expenses
Net cash provided by operating activities

(b)

Indirect Method
Operating Activities:
Net Income
Add: Depreciation
Increase in Accounts payable
Increase in income taxes payable
Decrease in prepaid expenses
Less: Increase in accounts receivable
Increase in inventory
Decrease in interest payable
Net cash provided by operating activities

Income
Statement
$675,400
(243,500)
(51,000)
(124,600)
(11,300)
(44,000)
(98,700)
$102,300

Adjustments

Statement of Cash Flows