The net income reported on the income statement for the current year was $73,600. Depreciation recorded on store equipment for the year amounted to $27,400. 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 $23,500 $18,700 Accounts receivable (net) 56,000 48,000 Merchandise inventory 35,500 40,000 Prepaid expenses 4,750 7,000 Accounts payable (merchandise creditors) 21,800 16,800 Wages payable 4,900 5,800 A.Prepare the Cash Flows from (used for) Operating Activities section of the statement of cash flows, using the indirect method.
The net income reported on the income statement for the current year was $73,600. Depreciation recorded on store equipment for the year amounted to $27,400. 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 $23,500 $18,700 Accounts receivable (net) 56,000 48,000 Merchandise inventory 35,500 40,000 Prepaid expenses 4,750 7,000 Accounts payable (merchandise creditors) 21,800 16,800 Wages payable 4,900 5,800 A.Prepare the Cash Flows from (used for) Operating Activities section of the statement of cash flows, using the indirect method.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The net income reported on the income statement for the current year was $73,600. Depreciation recorded on store equipment for the year amounted to $27,400. 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 $23,500 $18,700
Accounts receivable (net) 56,000 48,000
Merchandise inventory 35,500 40,000
Prepaid expenses 4,750 7,000
Accounts payable (merchandise creditors) 21,800 16,800
Wages payable 4,900 5,800
A.Prepare the Cash Flows from (used for) Operating Activities section of the statement of cash flows, using the indirect method.
B.Briefly explain why net cash flows from operating activities is different from net income.
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