Smithson Corp. had the following selected balance sheet changes for the past yea

Question

Smithson Corp. had the following selected balance sheet changes for the past year:

Assets Increase (Decrease)

Cash $47,000

Accounts Receivable $10,000

Inventory $15,000

Prepaid Expenses ($7,000)

Accumulated Depreciation $11,000

Liabilities Increase (Decrease)

Accounts Payable $20,000

Wages Payable   ($12,000)

Taxes Payable $9,000

The company's net income during the year was $35,000. What is the net cash provided by operating activities during the year on the statement of cash flows using the indirect method?

Explanation / Answer

Answer

cash flows from operating activities

net income = 35000

non cash expenses = + 11000

decrease in current assets = + 7000

increase in current assets = - 25000

increase in current liabilities = + 29000

decrease in current liabilites = - 12000   

net cash flow from operating activites = 45000

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