Question

Section Problem (10 points). The income statement for Williams Company forthe year ending December 31, 20XS is attached. The following additional information is also available. WILLIAMS COMPANY ADDITIONAL INFORMATION AVAILABLE FOR PREPARING STATEMENT OF CASH FLOWS FOR YEAR ENDING DECEMBER 31, 20XS (1) Paid cash dividends of $150,000 during the year (2) Accounts receivable increased $400,000 during the year. (3) Inventory increased $250,000 during the year (4) Prepaid expenses increased $200,000 during the year. (5) Purchased equipment for cash in the amount of $250,000 during the year (6) Accounts payable to merchandise suppliers increased $100,000 during the year. (7) Accrued expenses payable increased S180,000 during the year. REQUIRED: Using the above information, prepare, in proper form, the operating activities section of the statement of cash flows for the year ending December 31, 20X5 for Williams Company, using the indirect method.

Answer 1

Cash flows from operating activities
Net Income		$   770,000
Adjustments to reconcile net income to ;
Depreciation expense	$   125,000
Amortization expense	$      55,000
Increase in accounts receivable	$ (400,000)
Increase in inventories	$ (250,000)
Increase in prepaid expense	$ (200,000)
Increase in accounts payable to merchandise supplies	$   100,000
Increase in accrued expense payable	$   180,000
		$ (390,000)
Cash flow provided by operating activities		$   380,000

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