Please explain how the study guide gets 20 k in depn. It looks like they added the 7k difference between the book value and cost to the depn stated in the

selected accounts. However that 7k should already be in the accum epn-what am I missing

Madden Corporation's controller has gathered the following information as a basis for preparing the statement of cash flows. Net income for the current year was $82,000. During the year, old equipment with a cost of $60,000 and a net carrying value of $53,000 was sold for cash at a gain of $10,000. New equipment was purchased for $100,000. Shown below are selected closing balances for last year and the current year:

Last Year Current Year Cash $ 39,000 $ 85,000 Accounts receivable net 43,000 37,000 Inventories 93,000 105,000 Equipment 360,000 400,000 Accumulated depreciation - equipment 70,000 83,000 Accounts payable 22,000 19,000 Notes payable 100,000 100,000 Common stock 250,000 250,000 Retained earnings 93,000 175,000

Madden's cash inflow from operating activities for the current year is:

$63,000.

$73,000.

$83,000.

$93,000.

FINISH

Explanation

Madden's net cash flow from operating activities is $83,000, as shown below:

Net income $82,000 Decrease in receivables + 6,000 Increase in inventory -12,000 Depreciation expense +20,000 Decrease in payables - 3,000 Gain on equipment sale -10,000 Cash flow $83,000