FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Cash Flows from Operating Activities—Indirect Method

The income statement disclosed the following items for the year:

Depreciation expense $57,600
Gain on disposal of equipment 33,600
Net income 508,000

The changes in the current asset and liability accounts for the year are as follows:

  Increase
(Decrease)
Accounts receivable $8,960     
Inventory (5,120)    
Prepaid insurance (1,920)    
Accounts payable (6,080)    
Income taxes payable 1,410     
Dividends payable 2,200     

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 out flows, cash payments, decreases in cash, or any negative adjustments.

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