The statement of cash flows for Riker Company (prepared using the indirect method) follows. Consider the following additional information:
(a) Sales for the year totaled $812,350. Cost of goods sold was $500,000. Operating expenses were $100,000. Interest expense was $23,000. Income tax expense was $40,430.
(b) Of the decrease in accounts payable, 80% is related to inventory purchases; the remaining 20% related to operating expenses.
(c) Depreciation and amortization are period costs; they do not enter into the computation of cost of goods sold.
Riker Company
Statement of Cash Flows (Indirect Method)

Transcribed Image Text:

Cash flows from operating activities: liki ікипп Adjustments: 68,850 Depreciation expense. Amortization expense. Loss on sale of machine Gain on retirement of long-term debt. Increase in accounts receivable $65,000 10,000 7,400 (2,330) (8,600) 12,430 1,680 (2,400) Decrease in accounts payable Increase in interest payable Increase in income taxes payable Net cash provided by operating activities 2,500 86,180 $155,030 Cash flows from investing activities Sale of machine Purchase of fixed assets Net cash used in investing activities $12,000 (78,000) (66,000) Cash flows from financing activities: Retirement of longterm debt Payment of dividends Net cash used in financing activities $(65,000) (27,000) Net decrease in cash Cash at beginning of year Cash at end of year (92,000) $ (2,970) 5.320 $ 2,350