M12-5 computing cash flows from operating activities (indirect method) [lo 12-2] the two independent cases are listed below: case a case b year 2 year 1 year 2 year 1 sales revenue $ 11,600 $ 12,000 $ 21,600 $ 21,000 cost of goods sold 6,540 8,700 12,540 12,940 gross profit 5,060 3,300 9,060 8,060 depreciation expense 1,000 1,000 1,800 1,800 salaries and wages expense 1,900 1,400 5,600 5,600 net income 2,160 900 1,660 660 accounts receivable 330 460 810 630 inventory 780 560 760 860 accounts payable 860 730 860 940 salaries and wages payable 1,030 1,260 230 310

show the operating activities section of the statement of cash flows for year 2 using the indirect method. (amounts to be deducted should be indicated with a minus sign.)

Secured loans are protected by collateral security. examples: title loans where the borrower uses the car title as collateral security interest rates are lower and repayments are longer therefore risk is low as a collateral security is given as guarantee to the bank in case of failure to pay the loanunsecured loans are not protected by collateral security but it is given on the creditworthiness of the borrower, trusting that she/he will pay on time. examples; payday loans is a short term loan where the borrower lends money from the bank and pays is back when the borrower receives his/her wages.interest rates are high and repayments are shorter. but the risk is high as no collateral security is given as a guarantee to the bank for payment of the loan