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.
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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
The income statement disclosed the following items for the year:
| $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) |
|||
| $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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