Chew Corporation prepares its statement of cash flows using the indirect method

Question

Chew Corporation prepares its statement of cash flows using the indirect method of reporting operating activities. Net income for the 2018 fiscal year was $1,269,000. Depreciation expense of $159,000 was included with operating expenses in the income statement. The following information describes the changes in current assets and liabilities other than cash: Increase in accounts receivable Decrease in inventories Decrease in prepaid expenses Decrease in salaries payable Increase in income taxes payable $171,000 127,000 81,000 49,000 63,000 Required Prepare the cash flows from operating activities for 2018. (Amounts to be deducted should be indicated with a minus sign.) Cash flows from operating activities: Adjustments for noncash effects: Changes in operating assets and liabilities: Net cash flows from operating activities

Explanation / Answer

Chew Corporation Statement of cash flows from operating activities (Indirect Method) For the year ended 2018 Cash flow from operating activities: Net Income $        12,69,000 Adjustents for noncash effects: Depreciation Expense 1,59,000 Changes in operating assets and liabilities: Increase in accounts receivable             -1,71,000 Decrease in inventories 1,27,000 Decrease in prepaid expense 81,000 Decrease in salaries payable -49,000 Increase in income tax payable 63,000 Net Cash flow from operating activities            14,79,000

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