Tate Company's 20X2 Income Statement and Changes in Selected Balance

Essay

Tate Company's 20X2 income statement and changes in selected balance sheet accounts are given below. Calculate the company's net cash provided or used by operating activities using the direct method.
Tate Company Income Statement
For Year Ended December 31, 20X2
$$\begin{array} { l | l | l } \hline \text { Sales } & & \$ 248,000 \\\hline \text { Cost of goods sold } & & 116,000 \\\hline \text { Gross profit } & & \$ 132,000 \\\hline \text { Operating expenses: } & & \\\hline \text { Wages and salaries expense } & \$ 44,000 & \\\hline \text { Rent expense } & 16,000 & \\\hline \text { Depreciation expense } & 30,000 & \\\hline \text { Amortization expens } & 12,000 & \\\hline \text { Other expenses } & 18,000 & 120,000 \\\hline \text { Income from operations } & & \$ 12,000 \\\hline \text { Gain on sale of equipment } & & 26,000 \\\hline\end{array}$$ $\begin{array}{l|l|l|}\hline \text { Gain on sale of equipment } & \quad& 26,000 \\\hline \text { Income before taxes } & &\$ 38,000 \\\hline \text { Income tax expense } && 13,300 \\\hline \text { Net Income } && \$ 24,700 \\\hline\end{array}$ The company also experienced the following during 20X2:
$$\begin{array} { l | l } \text { Increase in accounts receivable } & \$ 4,000 \\\hline \text { Increase in accounts payable (all accounts } & \\\hline \text { payable transactions are for inventory) } & 16,000 \\\hline \text { Increase in income taxes payable } & 300 \\\hline \text { Decrease in prepaid expenses } & 10,000 \\\hline \text { Decrease in merchandise inventory } & 14,000 \\\hline \text { Decrease in long-term notes payable } & 20,000\end{array}$$