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

ID: 2381577 • Letter: T

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

Instructions

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

  

     

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

  

Explanation / Answer

Operating cashflows:


Net income: 155,000

Depreciation: 65,000

Decrease in accounts receivable: 13,000

Decrease in inventories: 15,000

Decrease in accounts payable: -6,000

Total cash generated from operating activities: 242,000


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