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ACC - Cowan, Inc. Problem




Question;Presented below is the income statement of Cowan, Inc.:Sales $380,000Cost of goods sold 225,000Gross profit $155,000Operating expenses 85,000Income before income taxes 70,000Income taxes 28,000Net income $ 42,000In addition, the following information related to net changes in working capital is presented:Debit CreditCash $12,000Trade accounts receivable 15,000Inventories $19,400Salaries payable (operating expenses) 8,000Trade accounts payable 12,000Income tax payable 3,000The company also indicates that depreciation expense for the year was $16,700 and that the deferred tax liability account increased $2,600.InstructionsPrepare a schedule computing the net cash flow from operating activities that would be shown on a statement of cash flows:(a) using the indirect method.(b) using the direct method.


Paper#41571 | Written in 18-Jul-2015

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