Suppose the income statement for Goggle Company reports 123

Suppose the income statement for Goggle Company reports $123 of net income, after deducting depreciation of $28. The company bought equipment costing $95 and obtained a long-term bank loan for $98. Required: 1. Calculate the change in each balance sheet account and indicate whether each account relates to operating, investing, and/or financing activities +for increase and - for decrease). (Select \"NE\" if there is no effect. Enter all amounts as positive values.) Previous Year Current Year Change Type 42 $ 82 295 535 (38) 916 $ 289 189 142 630 (66) 1,184 64 550 17 553 1,184 Cash Accounts Receivable Inventory Equipment Accumulated Depreciation Equipment Total Salaries and Wages Payable Notes Payable (long-term) Common Stock Retained Earnings 17 $ 452 17 430 916 $ Total

Solution

Required 1 previous Current Change Type Year Year cash 42 289 247 NE Account receivable 82 189 107 operating inventory 295 142 -153 operating Equipment 535 630 95 investing Accumulated Depreciation-Equipment -38 -66 28 operating Total 916 1184 Salaries and wages payable 17 64 47 operating notes payable (long- term) 452 550 98 financing Common Stock 17 17 0 financing Retained Earnings 430 553 123 NE total 916 1184 Required 2 Statement of cash flow for the year ended December   31 Cash flow from Operating Activities net income for the year 123 Adjustment to reconcile net income to net cash provided by operating activities Add: Depreciation 28 Changes in current assets and current liabilities increase in account receivable -107 Decrease in inventory 153 increase in salaries and wages payable 47 121 Net cash flow from operating activities 244 Cash flow from investing activities purchase of Equipment -95 Net cash used by investing activities -95 Cash flow from financing activities Cash from borrowing 98 net cash provided by financing activities 98 Net increase in cash 247 Cash at the beginning of the year 42 Cash at year end 289 Requirement 3 A healthy company as cash flow is positive and financing outflows are sufficient to cover investing flows