Question

Cash Flows from Operating Activities—Indirect Method

The net income reported on the income statement for the current year was $130,100. Depreciation recorded on store equipment for the year amounted to $21,500. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows:

	End of Year		Beginning of Year
Cash	$50,610		$46,560
Accounts receivable (net)	36,290		34,410
Merchandise inventory	49,550		52,380
Prepaid expenses	5,570		4,420
Accounts payable (merchandise creditors)	47,420		44,050
Wages payable	25,910		28,770

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 outflows, cash payments, decreases in cash, or any negative adjustments.

Statement of Cash Flows (partial)
Cash flows from operating activities:
	$
Adjustments to reconcile net income to net cash flow from operating activities:
Changes in current operating assets and liabilities:
Net cash flow from operating activities		$

Answer 1

Answer-

STATEMENT OF CASH FLOWS PARTIAL (USING INDIRECT METHOD)
FOR THE YEAR ENDED
Particulars		Amount
		$
Cash flow from operating activities
Net Income		130100
Adjustments to reconcile net income to net cash provided by operating activities
Adjustment for non cash effects
Depreciation expenses		21500
Change in operating assets & liabilities
Increase in Accounts receivable		-1880
Decrease in merchandise inventory		2830
Increase in prepaid expenses		-1150
Increase in accounts payable		3370
Decrease in wages payable		-2860
Net cash flow from operating activities		151910