Cash Flows from Operating Activities-Indirect Method The net income reported on the income statement for the current year was $294,100. Depreciation recorded on equipment and a building amounted to $87,900 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 $75,580 $80,110 Accounts receivable (net) 95,840 98,860 Inventories 188,950 170,310 Prepaid expenses 10,510 11,300 Accounts payable (merchandise creditors) 84,420 89,400 Salaries payable 12,170 11,140 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: Net income Adjustments to reconcile net income to net cash flow from operating activities: Depreciation :V Changes in current operating assets and liabilities: Decrease in accounts receivable Increase in inventories Decrease in prepaid expenses Decrease in accounts payable Increase in salaries payable -V Net cash flow from operating activities

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Cash Flows from Operating Activities-Indirect Method
The net income reported on the income statement for the current year was $294,100. Depreciation recorded on equipment and a building amounted to $87,900 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
$75,580
$80,110
Accounts receivable (net)
95,840
98,860
Inventories
188,950
170,310
Prepaid expenses
10,510
11,300
Accounts payable (merchandise creditors)
84,420
89,400
Salaries payable
12,170
11,140
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:
Net income
Adjustments to reconcile net income to net cash flow from operating activities:
Depreciation
Changes in current operating assets and liabilities:
Decrease in accounts receivable
Increase in inventories
Decrease in prepaid expenses
Decrease in accounts payable
Increase in salaries payable
Net cash flow from operating activities
Transcribed Image Text:Cash Flows from Operating Activities-Indirect Method The net income reported on the income statement for the current year was $294,100. Depreciation recorded on equipment and a building amounted to $87,900 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 $75,580 $80,110 Accounts receivable (net) 95,840 98,860 Inventories 188,950 170,310 Prepaid expenses 10,510 11,300 Accounts payable (merchandise creditors) 84,420 89,400 Salaries payable 12,170 11,140 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: Net income Adjustments to reconcile net income to net cash flow from operating activities: Depreciation Changes in current operating assets and liabilities: Decrease in accounts receivable Increase in inventories Decrease in prepaid expenses Decrease in accounts payable Increase in salaries payable Net cash flow from operating activities
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