here is the question :
balance sheet

assets 2002 2001
cash 29000 13000
accounts receivable 28000 14000
inventory 25000 35000
property,equipment,plant 60000 78000
accumulated depreciation (20000) (24000)

TOTAL 122000 116000

LIABILITIES AND AWNERS EQUITY

accounts payable 27000 23000
income taxes payable 5000 8000
bonds payable 27000 33000
common stock 18000 14000
retained earnings 45000 38000

TOTAL 122000 116000



INCOME STATEMENT
for the year ended dec 31 2002
sales 220000
cost of goods sold 180000

gross profit 40000
selling expenses 14000
administrative expenses 10000 24000
income from operations 16000
interest expenses 2000
income before income taxes 14000
income taxe expenses 4000
net income 10000

additional information:
dividends declared and paid were 3000
equipment was sold for 8500this equipment cost 18000 originally and have a book value
of 8500at the time of sale
all depreciation expenses is in the selling expenses category
all sales and purchases are on account



MY ANSWER IS :
cash flow from operating activities :
net income 10000
depreciation expenses 14000
accounts receivable (14000)
inventory 10000
accounts payable 4000
income taxes payable (3000)
net cash provided by operating activities 21000HERE IS THE PROBLEM?

according to the book the answer should be 12500 not 21000??
is there is any mistake in my solution or what?
I will appreciate any effort whether a complete solution or hint
thanks a lot
RAIN_BOW0

What about your Financing and Investing sections of the Cash Flow Statement?

See this website, it will help to explain a Cash Flow Statement:

http://www.googobits.com/articles/93...statement.html

And

http://www.investopedia.com/articles/04/033104.asp

I found my mistake and i put the answer for every one to know the right solution
In the additional information the equipment costs 18000 and its book value is 8500 at the time of sale which means that accumulated depreciation = 18000-8500=9500
And the accumulated depreciation in the balance sheet =20000-24000=-4000
So depreciation expenses = 9500-4000=5500
So cash flow from operating activities = 10000+5500-14000+10000+4000-3000=12500

That's IT

RAIN_BOW0