The Dickinson Company reported net income of $155,000 for the current year. Depr

Question

The Dickinson Company reported net income of $155,000 for the current year. Depreciation recorded on buildings and equipment amounted to $65,000 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 $20,000 $15,000

Accounts Receivable 19,000 32,000

Inventories 50,000 65,000

Accounts Payable 12,000 18,000

Instuctions

Prepare the cash flows from the operating activities section of the statement of cash flows using the indirect method.

Explanation / Answer

Hi,

Please find the answer as follows:

Net Income = 155000

+ Depreciation = 65000

+ Decrease in Accounts Receivables = 13000

+ Decrease in Inventories = 15000

- Decrease in Accounts Payables = 6000

Net Cash Flow from Operating Activities = 155000 + 65000 + 13000 + 15000 - 6000 = 242000

Thanks.

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