The net income reported on the income statement for the current year was $210,00

Question

The net income reported on the income statement for the current year was $210,000. Depreciation recorded on equipment and a building amounted to $62,500 for the year. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows:

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a. Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method. If needed, use the minus sign to indicate cash outflows.

Explanation / Answer

The net income reported on the income statement for the current year was $210,000. Depreciation was $25,000. Accounts receivable and inventories decreased by $5,000 and $15,000, respectively. Prepaid expenses and accounts payable increased, respectively, by $500 and $4,000. How much cash was provided by operating activities? 210,000 + 25,000 + 5,000 + 15,000 - 500 + 4,000 = $258,500.

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