ABC Manufacturing Inc. Income Statement Year Ended December 31, 20X4

Sale $ 200,000

Cost of goods sold $ 120,000

Gross Profit $ 80,000

Operating Expenses $ 40,000

Loss on Sale of equipment $ 2,000 $ 42,000

Profit from Operations $ 38,000

Other expenses

Interest Expense $ 2,000

Profit before Income Tax $ 36,000

Income Tax Expense $ 8,000 Profit $ 28,000 ABC Manufacturing Inc. comparative balance sheet at December 31 20X4 20X3 Cash $ 4,500 $ 4,300 Accounts Receivable $ 72,000 $ 6,500 Inventory $ 110,000 $ 140,000 Prepaid Expenses $ 1,550 $ 1,020 Equipment $ 98,000 $ 100,000 Accumulated Depreciation - equipment $ (50,000 ) $ (42,000 ) Total Assets $ 236,050 $ 209,820 Account Payable $ 15,330 $ 9,900 Interest Payable $ 510 $ 10 Income taxes payable $ 10,800 $ 9,500 Dividends Payable $ 1,800 $ 3,800 Long-term Notes Payable $ 50,000 $ 65,000 Common shares $ 130,000 $ 120,000 Retained Earnings $ 27,610 $ 1,610 Total Liabilities & Shareholders' Equity $ 236,050 $ 209,820 Additional Information: Operating expenses include depreciation expense of $10,000 Accounts Payable related to the purchase of inventory Equipment that cost $8,000 was sold at a loss of $2,000 New equipment was purchased during the year for $6,000 Dividends declared and paid in 20X4 totaled $2,000 Common shares were sold for $10,000 cash Interest payable in 20X4 was $500 greater than interest payable in 20X3 By how much has the changes in Working Capital generated or (used) cash when the indirect method to prepare cash flow statements is use? Assume the company uses ASPE.

Answer rating: 100% (QA)

To calculate the change in Working Capital that has generated or used cash we need to analyze the ch... View the full answer