Question

Cash Flows from Operating Activities - Indirect Method The net income reported on the income statement for the current year was $213,300. Depreciation recorded on equipment and a building amounted to $63,800 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 $59,510 $61,890 Accounts receivable (net) 75,460 76,370 Inventories 148,780 131,580 Prepaid expenses 8,270 8,730 Accounts payable (merchandise creditors) 66,470 69,070 Salaries payable 9,580 8,600 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: [ 1 llll

Answer 1

с A B 1 a. 2 Statement of Cash Flows (partial) 3 Cash flows from operating activities: 4 Net income $213,300 Adjustments to reconcile net income to net cash flow 5 from operating activities: 6 Depreciation $63,800 7 Changes in current operating assets and liabilities: 8 Accounts receivable $910 9 Inventories ($17,200) 10 Prepaid expenses $460 11 Accounts payable ($2,600) 12 Salaries payable $980 13 Net cash flow from operating activities 14 15 6. 16 Yes, it would have been the same $259,650 Calculations are shown below: с A B 1 a. 2 Statement of Cash Flows (partial) 3 Cash flows from operating activities: 4 Net income 213300 Adjustments to reconcile net income to net cash 5 flow from operating activities: 6 Depreciation 63800 7 Changes in current operating assets and liabilities: 8 Accounts receivable =76370-75460 9 Inventories 1=131580-148780 10 Prepaid expenses =8730-8270 11 Accounts payable =66470-69070 12 Salaries payable =9580-8600 13 Net cash flow from operating activities 14 15 b. 16 Yes, it would have been the same. =SUM(B4:B12)