Compute net cash provided by operating activities

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Reference no: EM131809248

Comparative balance sheet accounts of Sharpe Company are presented below.

Additional data:

1. Equipment that cost $10,000 and was 60% depreciated was sold in 2014.

2. Cash dividends were declared and paid during the year.

3. Common stock was issued in exchange for land.

4. Investments that cost $35,000 were sold during the year.

5. There were no write-offs of uncollectible accounts during the year

Sharpe's 2014 income statement is as follows.

Sales revenue

 

$950,000

Less: Cost of goods sold

 

600,000

Gross profit

 

350,000

Less: Operating expenses (includes depreciation expense and bad debt expense)

 

250,000

Income from operations

 

100,000

Other revenues and expenses

 

 

Gain on sale of investments

$15,000 

 

Loss on sale of equipment

(3,000)

12,000

Income before taxes

 

112,000

Income taxes

 

45,000

Net income

 

$ 67,000

Instructions

(a) Compute net cash provided by operating activities under the direct method.

(b) Prepare a statement of cash flows using the indirect method.

Reference no: EM131809248

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