Question

Hampton Company reports the following information for its recent calendar year.

Income Statement Data				Selected Year-End Balance Sheet Data
Sales	$	72,000		Accounts receivable increase	$	6,000
Expenses				Inventory decrease		3,000
Cost of goods sold		40,000		Salaries payable increase		1,000
Salaries expense		10,000
Depreciation expense		7,000
Net income	$	15,000

Prepare the operating activities section of the statement of cash flows for Hampton Company using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)

	Cash flows from operating activities $0

Answer 1

15,000 Partial statement of cash flows Cash flow from operating activities: Net income Adjustments to reconcile net income to cash flow from operating activities: Depreciation expense Less: Accounts receivable increase Add: Inventory decrease Add: Salaries payable increase Net cash flow from operating activities 7,000 -6,000 3,000 1,000 20,000