Changes in Current Operating Assets and Liabilities—Indirect Method Covington Corporation's comparative balance sheet for current assets...

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Changes in Current Operating Assets and Liabilities—Indirect Method Covington Corporation's comparative balance sheet for current assets...

Changes in Current Operating Assets and Liabilities—Indirect Method

Covington Corporation's comparative balance sheet for current assets and liabilities was as follows:

	Dec. 31, Year 2	Dec. 31, Year 1
Accounts receivable	$18,700	$23,400
Inventory	66,600	58,400
Accounts payable	19,100	16,300
Dividends payable	19,000	20,000

Adjust net income of $92,600 for changes in operating assets and liabilities to arrive at net cash flow from operating activities.
$

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Answer 1

Answer #1

Answer------------$91,900

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Covington Corporation
Statement of Cash Flows (partial)

Cash flows from operating activities:
Net Income	$ 92,600.00
Adjustments to reconcile net income to net cash flow from operating activities:
Decrease in accounts receivable	$ 4,700.00
Increase in inventory	$ (8,200.00)
Increase in accounts payable	$ 2,800.00
Net cash flow from operating activities		$ 91,900.00

Dividends payable are not adjusted when cash flow from operation is calculated.

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Answer 2

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