Brooks Company reported net income of $40,000, which included depreciation expense and amortization expense of $21,000 and $18,000, respectively. The following changes also occurred during 2014: $$\begin{array} { l r l }
\text { Inventory } & \$ 10,000 & \text { decrease } \
\text { Accounts payable } & 5,000 & \text { increase } \
\text { Notes payable (long-term) } & 15,000 & \text { decrease } \
\text { Income tax payable } & 7,000 & \text { increase } \
\text { Accounts receivable } & 10,000 & \text { increase }
\end{array}$$ Required:
Calculate net cash flows from operating activities, using the indirect method.

Question

Brooks Company reported net income of $40,000, which included depreciation expense and amortization expense of $21,000 and $18,000, respectively. The following changes also occurred during 2014: $$\begin{array} { l r l } 
\text { Inventory } & \$ 10,000 & \text { decrease } \
\text { Accounts payable } & 5,000 & \text { increase } \
\text { Notes payable (long-term) } & 15,000 & \text { decrease } \
\text { Income tax payable } & 7,000 & \text { increase } \
\text { Accounts receivable } & 10,000 & \text { increase }
\end{array}$$ Required:
Calculate net cash flows from operating activities, using the indirect method.

Quizplus · Accepted Answer

The Answer of Brooks Company reported net income of $40,000, which included depreciation expense and amortization expense of $21,000 and $18,000, respectively. The following changes also occurred during 2014: $$\begin{array} { l r l } 
\text { Inventory } & \$ 10,000 & \text { decrease } \
\text { Accounts payable } & 5,000 & \text { increase } \
\text { Notes payable (long-term) } & 15,000 & \text { decrease } \
\text { Income tax payable } & 7,000 & \text { increase } \
\text { Accounts receivable } & 10,000 & \text { increase }
\end{array}$$ Required:
Calculate net cash flows from operating activities, using the indirect method.

Brooks Company Reported Net Income of $40,000, Which Included Depreciation