Fitz company reports the following information. selected annual income statement data selected year-end balance sheet data net income $ 394,000 accounts receivable decrease $ 73,900 depreciation expense 48,400 inventory decrease 51,500 amortization expense 8,700 prepaid expenses increase 6,600 gain on sale of plant assets 6,000 accounts payable decrease 11,000 salaries payable increase 1,700 use the indirect method to prepare the operating activities section of its statement of cash flows for the year ended december 31. (amounts to be deducted should be indicated with a minus sign.)

December 31

Net income                                    $ 394,000

Depreciation expense                       $48,400

Amortization expense                         $8,700

Gain on sale of plant assets      (-$6,000)

Operations Activities                   $445,100

Accounts receivable                       $ 73,900

Inventory decrease                       $51,500

Prepaid expenses                                 $ 6,600

Accounts payable                                -$11,000

Salaries payable                                   $1,700

Cash Flows of Operation Activities   $567,800

in 2001, dell computer became the world’s largest personal computer vendor, continuing to

gain market share and post profits in an industry struggling with slumping sales and billions of

dollars in losses. dell sells 90% of its pcs directly to the final customer, largely bypassing the

reseller channel that accounts for most of the world’s pc sales. this direct customer relationship

is the key to dell’s business model, and provides distinct advantages over the indirect sales

model. dell’s direct relationship with the customer allows it to tailor its offerings to customer

needs, offer add-on products and services, and use the internet to offer a variety of customer

services. in addition, dell’s pcs are built to customers’ specifications upon receipt of an order,

giving dell additional advantages over indirect pc vendors who must try to forecast demand and

ship products based on those forecasts. dell’s direct sales and build-to-order model has achieved

superior performance in the pc industry in terms of inventory turnover, reduced overhead, cash

conversion, and return on investment (kraemer, et al., 2000).

explanation: