The net income reported on the income statement for the current year was $720,00

Question

The net income reported on the income statement for the current year was $720,000. Depreciation recorded on store equipment for the year amounted to $32,700. 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 78450 72300
accounts receivable (net) 56250 53400
Merch. Inv. 76800 81330
prepaid expense 9000 6900
accounts payable (merch creditors) 73500 68400
wages payable 40200 44700

Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method. Use the minus sign to indicate any cash outflows or negative amounts.

Explanation / Answer

Net Income 720,000 Add: Depreciation Expense 32,700 Add: Decrease in Merchandise Inventory 4,530 Add: Increase in Accounts Payable 5,100 Less: Increase in Accounts Receivable -2,850 Less: Increase in Prepaid Expenses -2,100 Less: Decrease in Wages Payable -4,500 Cash flows from operating activities 752,880

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