Instructions

For each transaction above, (a) prepare the journal entry, and (b) indicate how it would affect the statement of cash ows using the indirect method.

E13-4. Gutierrez Company reported net income of $225,000 for 2015. Gutierrez also reported depreciation expense of $45,000 and a loss of $5,000 on the disposal of equipment. The comparative balance sheet shows a decrease in accounts receivable of $15,000 for the year, a $17,000 increase in accounts payable, and a $4,000 decrease in prepaid expenses.

Instructions

Prepare the operating activities section of the statement of cash ows for 2015. Use the indirect method.

Problems

P13-3A. The income statement of Whitlock Company is presented here.

Whitlock Company

Income Statement

For the Year Ended November 30, 2015

Sales Revenue $7,700,000

Cost of Goods Sold

Beginning Inventory $1,900,000

Purchases $4,400,000

Goods available for sale $6,300,000

Ending Inventory $1,400,000

Total Cost of goods sold $4,900,000

Gross Profit $2,800,000

Operating Expenses $1,150,000

Net Income $1,650,000

Additional information:

Accounts receivable increased $200,000 during the year, and inventory decreased $500,000.

Prepaid expenses increased $150,000 during the year.

Accounts payable to suppliers of merchandise decreased $340,000 during the year.

Accrued expenses payable decreased $100,000 during the year.

Operating expenses include depreciation expense of $70,000.