Problem:
Water Girl Corp.'s 2005 income statement follows:
Water GM Corp.
Income Statement
For Year Ended D ecember 31, 2005
|
Sales
Cost of goods sold. Gross profit .
Operating expenses:
|
|
S248,000
116 000
|
|
S132,000
|
|
Wages and salaries expense .
|
S44,000
|
|
|
Rent expense
|
16,000
|
|
|
Depreciation expense
|
30,000
|
|
|
Amortization expense .
|
12,000
|
|
|
Other expenses
|
18,000
|
120,000
|
|
Income from operations
|
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S 12,000
|
|
Gain on sale of equipment
|
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26,000
|
|
Income before taxes .........................................
|
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$ 38,000
|
|
Income tax expense .
|
|
13,300
|
|
Net Income ......................................................
|
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$ 24300
|
The company also experienced the following during 2005:
Increase in accounts receivable S 4,000
Increase in accounts payable (all accourts
payable transactions are for inventory)........ 16,000
Increase in income tax es payable 300
Decrease in prepaid expenses 10,000
Decrease in merchandise inventory. 14,000
Decrease in long-term notes payable 20,000
Required:
Calculate the company's net cash provided or used by operating activities using the direct method.