Sigma Company develops and markets organic food products to natural foods retailers.The following information is available for the company for the year 20X8:

-Based on the preceding information,what amount will be reported by the company as cash flows from operating activities for 20X8?
A)$175,000
B)$133,000
C)$167,000
D)$207,000

Question

Sigma Company develops and markets organic food products to natural foods retailers.The following information is available for the company for the year 20X8:
 
-Based on the preceding information,what amount will be reported by the company as cash flows from operating activities for 20X8?
A)$175,000 
B)$133,000 
C)$167,000 
D)$207,000

Quizplus · Accepted Answer

To calculate cash flows from operating activities, we start with net income and make adjustments for non-cash expenses and changes in current assets and liabilities. 
Starting with net income of $152,000, we add back depreciation of $28,000 and amortization of $3,000. Then we subtract the increase in accounts receivable of $12,000, add the decrease in inventory of $5,000, subtract the increase in accounts payable of $32,000, and add the increase in accrued expenses of $8,000. 
Net Income + Depreciation + Amortization - Increase in AR + Decrease in Inventory - Increase in AP + Increase in Accrued Expenses = 
$152,000 + $28,000 + $3,000 - $12,000 - $5,000 - $32,000 + $8,000 = $133,000 
Therefore, the amount reported by the company as cash flows from operating activities for 20X8 is $133,000.

Sigma Company Develops and Markets Organic Food Products to Natural