Question

Cash Flows from Operating Activities—Indirect Method

The net income reported on the income statement for the current year was $306,300. Depreciation recorded on equipment and a building amounted to $91,600 for the year. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows:

Cash Flows from Operating Activities-Indirect Method The net income reported on the income statement for the current year was $306,300. Depreciation recorded on equipment and a building amounted to $91,600 for the year. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows: End of Year $84,850 107,590 212,130 11,790 94,780 13,660 Beginning of Year Cash Accounts receivable (net) Inventories Prepaid expenses Accounts payable (merchandise creditors) Salaries payable a. Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method. Use the minus sign to indicate cash out flows, cash payments, decreases in cash, or any negative adjustments. $89,090 109,940 189,410 12,560 99,420 12,380

Answer 1

Statement of Cash Flows (partial)
Cash flows from operating activities:
Net income	306300
Adjustments to reconcile net income to net cash flow from operating activities:
Depreciation	91600
Changes in current operating assets and liabilities:
Decrease in accounts receivable	2350
Increase in inventories	-22720
Decrease in prepaid expenses	770
Decrease in accounts payable	-4640
Increase in salaries payable	1280
Net cash flow from operating activities		374940
b
Yes,the net cash flow from operating activities would have been the same under direct method