Issues stock and receives $1000 in cash (T2) Issues 10%, 2 year bond for $2,000...
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Issues stock and receives $1000 in cash (T2) Issues 10%, 2 year bond for $2,000 in cash. Part of the principal ($1,000) is due on 12/31/1995. Interest is not paid until 12/31/1996. (3) Buys equipment, issuing a 8% note payable, for $1,500. There is no salvage value and its useful life is 3 years. (T4) Buys inventory worth $1,000 with cash. Transactions during the year: (T5) Sells inventory that cost $600 for $5,000 on account. (T6) Collects $500 of the receivables from customers. Transactions at 12/31/95: (T7) Pays $1,000 of bond principal. (T8) Records interest accrued on bond $200. (9) Pay and accrue interest on note $120. (T10) Records depreciation on equipment. (T11) Sells equipment for $1,800 in cash. T12) Pays dividend to shareholders of $2,000. prepare cash flow from operations using indirect method. net income is 4380
direct method operating activities is -620 also calculate same using indirect method
Cash from Operating Activities Cash collection from customers (T6) 500 Cash paid to purchase inventory (T4) -1000 Cash paid for interest (T9) -120 Net Cash flows from Operating Activities -620
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