Refer to the information for Rodriguez Company in Exercise 12-8.

Data from in Exercise 12-8

Rodriguez Company completed its income statement and comparative balance sheet for the current year and provided the following information:

Required:

1. Present the operating activities section of the statement of cash flows for Rodriguez Company using the direct method. Assume that other accrued liabilities relate to other expenses on the income statement.

2. What were the major reasons that Rodriguez was able to report a net loss but positive cash flow from operations? Why are the reasons for the difference between cash flow from operations and net income important to financial analysts?

Transcribed Image Text:

Income Statement for Current Year Service revenue Expenses Salaries Depreciation Amortization of copyrights Other expenses Net loss Partial Balance Sheet Accounts receivable Salaries payable Other accrued liabilities $46,000 4,500 200 9,700 Current Year $ 8,000 12,000 1,000 $54,000 60,400 $ (6,400) Prior Year $13,000 1,000 2,800