The income statement of Vince Gill Company is shown below. (3,4)
VINCE GILL COMPANY
FOR THE YEAR ENDED DECEMBER 31, 2008
Cost of goods sold
Beginning inventory $1,900,000
Goods available for sale 6,300,000
Ending inventory 1,600,000
Cost of goods sold 4,700,000
Gross profit 2,200,000
Selling expenses 450,000
Administrative expenses 700,000
Net income $1,050,000
1. Accounts receivable decreased $360,000 during the year.
2. Prepaid expenses increased $170,000 during the year.
3. Accounts payable to suppliers of merchandise decreased $275,000 during the year.
4. Accrued expenses payable decreased $100,000 during the year.
5. Administrative expenses include depreciation expense of $60,000.
Prepare the operating activities section of the statement of cash flows for the year ended December 31, 2008, for Vince Gill Company, using the indirect method.
Please see the attached Excel 97-2003 spreadsheet.
Note that ...
Given an income statement and a summary of balance sheet account changes, this solution illustrates how to compute the company's cash flows from operating activities using the indirect method.