The net income reported on the income statement for the current year was $334,100. Depreciation recorded on equipment and a building amounted to $101,710 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 |
Beginning of Year |
|
Cash | $90,280 | $96,010 |
Accounts receivable (net) | 111,780 | 118,690 |
Inventories | 223,470 | 206,830 |
Prepaid expenses | 12,870 | 14,850 |
Accounts payable (merchandise creditors) | 96,330 | 103,900 |
Salaries payable | 15,720 | 13,840 |
Required:
A. | Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Use the minus sign to indicate cash outflows, cash payments, decreases in cash and for any adjustments, if required. |
B. |
If the direct method had been used, would the net cash flow from operating activities have been the same? |
The net income reported on the income statement for the current year was $334,100. Depreciation recorded on equipment and a building amounted to $101,710 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 |
Beginning of Year |
|
Cash | $90,280 | $96,010 |
Accounts receivable (net) | 111,780 | 118,690 |
Inventories | 223,470 | 206,830 |
Prepaid expenses | 12,870 | 14,850 |
Accounts payable (merchandise creditors) | 96,330 | 103,900 |
Salaries payable | 15,720 | 13,840 |
Required:
A. | Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Use the minus sign to indicate cash outflows, cash payments, decreases in cash and for any adjustments, if required. |
B. | If the direct method had been used, would the net cash flow from operating activities have been the same? |
X
Amount Descriptions
Amount Descriptions |
|
Amortization of intangible assets | |
Decrease in accounts payable | |
Decrease in accounts receivable | |
Decrease in inventories | |
Decrease in prepaid expenses | |
Decrease in salaries payable | |
Depreciation | |
Increase in accounts payable | |
Increase in accounts receivable | |
Increase in inventories | |
Increase in prepaid expenses | |
Increase in salaries payable | |
Net cash flow from operating activities | |
Net cash flow used for operating activities | |
Net income | |
Net loss |
X
Statement of Cash Flows-Operating Activities
A. Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Use the minus sign to indicate cash outflows, cash payments, decreases in cash and for any adjustments, if required.
Statement of Cash Flows (partial) |
1 |
Cash flows from operating activities: |
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2 |
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3 |
Adjustments to reconcile net income to net cash flow from operating activities: |
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4 |
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5 |
Changes in current operating assets and liabilities: |
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6 |
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7 |
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8 |
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9 |
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10 |
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11 |
Answer-A)-
STATEMENT OF CASH FLOWS PARTIAL (USING INDIRECT METHOD) | ||
FOR THE YEAR ENDED | ||
Particulars | Amount | |
$ | ||
Cash flow from operating activities | ||
Net Income | 334100 | |
Adjustments to reconcile net income to net cash provided by operating activities | ||
Adjustment for non cash effects | ||
Depreciation expenses | 101710 | |
Change in operating assets & liabilities | ||
Decrease in Accounts receivable | 6910 | |
Increase in merchandise inventory | -16640 | |
Decrease in prepaid expenses | 1980 | |
Decrease in accounts payable | -7570 | |
Increase in income salaries payable | 1880 | |
Net cash flow from operating activities | 422370 |
B)- If the direct method had been used, the net cash flow from operating activities would have been the same as calculated in indirect method.
The net income reported on the income statement for the current year was $334,100. Depreciation recorded...
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