Given the following information and using the indirect method prepare the Cash F

Question

Given the following information and using the indirect method prepare the Cash Flows from Operating Activities section of the statement of cash flows.

End of Year

Beginning of Year

Change

Cash

$ 23,500

$ 37,400

(13,900)

Accounts receivable (net)

84,500

80,350

4,150

Inventories

100,200

94,300

5,900

Prepaid expenses

4,970

5,300

(330)

Accounts payable (creditors)

71,400

68,900

2,500

Salaries Payable

5,320

6,450

(1,130)

Net Income reported on the income statement for the current year was $134,800. Depreciation expense recorded on buildings and equipment was $27,400 for the year.

Explanation / Answer

Net Income

$134,800

Add:

Decrease in prepaid expenses

$ 330

Increase in Accounts Payable

2,500

Depreciation Expense

27,400

30,230

165,030

Deduct:

Increase in Accounts Receivable

$ 4,150

Increase in Inventories

5,900

Decrease in Salaries Payable

1,130

11,180

Net Cash Flows from Operating Activities

$153,850

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