Question

The income statement disclosed the following items for the year Depreciation expense Gain on dispasal of equipment27,500 Net income $ 65,000 or the exact wording of the ans 620,000 The changes in the current asset and iabaity accounts for the year are as follows: Increase (Decrease) Accounts receivable Inventory Prepaid insurance Accounts payable Income taxes payable Dividends payable $11 200 (6,350) (1200) (4 200) 1,650 2,500 Required A Prepare the Cash Flows from Operating Activities section of the stetement of cash fows Using the indirect method Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries Use me minus sign to indicate cash outflows cash payments, decreases in cash and for any ajustments, if required B Briefy explain why net cash flows from operating activites is different from net income

Answer 1

Please put Minus sign on cash outflow

Cash flow From Operating Activities
Net Income	620000
Net Cash provided by operating Activities
Adjustment to reconcile Net income
Add Depreciation Expense	65000
Less Gain on disposal	-27500
Less Increase in Account Receivable	-11200
Add decrease in Inventory	6350
Add decrease n Prepaid Expense	1200
Less decrease in Account Payable	-4200
Add increase in Income Tax Payable	1650
Net Cash provided by operating Activities		651300