Weber Company had a $21,000 net loss from operations for 2018. Depreciation expense for 2018 was $8,600
Question:
Weber Company had a $21,000 net loss from operations for 2018. Depreciation expense for 2018 was $8,600 and a 2018 cash dividend of $6,000 was declared and paid. Balances of the current asset and current liability accounts at the beginning and end of 2018 follow. Did Weber Company's 2018 operating activities provide or use cash? Use the indirect method to determine your answer.
Ending Beginning S 7,000 $ 3,500 16,000 50,000 Cash...... Accounts receivable.. 25,000 Inventory.. Prepaid expenses. Accounts payable. 53,000 9,000 6,000 12,000 8,000 Accrued liabilities 5,000 7,600
Step by Step Answer:
Net loss 21000 Add deduct items to convert net loss to cash basis Add back depreciation 8600 ...View the full answer
Financial Accounting
ISBN: 9781618533111
6th Edition
Authors: Michelle L. Hanlon, Robert P. Magee, Glenn M. Pfeiffer, Thomas R. Dyckman
Related Video
Depreciation of non-current assets is the process of allocating the cost of the asset over its useful life. The cost of the asset includes the purchase price, any additional costs incurred to bring the asset to its current condition and location, and any other costs that are directly attributable to the asset. The useful life of the asset is the period over which the asset is expected to be used by the company. To calculate the depreciation, companies use different methods such as straight-line, declining-balance, sum-of-the-years\'-digits, units-of-production, and group depreciation. The chosen method will depend on the type of asset, the company\'s accounting policies, and the accounting standards that are applicable. The straight-line method allocates an equal amount of the asset\'s cost over its useful life, while the declining-balance method calculates depreciation at a fixed rate, typically double the straight-line rate, but the amount of depreciation decreases over time. The sum-of-the-years\'-digits method is similar to the declining-balance method, but the rate of depreciation is calculated using a fraction that is based on the useful life of the asset. It\'s important to note that the depreciation expense will be recorded on the company\'s income statement and the accumulated depreciation will be recorded on the company\'s balance sheet. This will decrease the value of the asset on the balance sheet over time.
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