Selected balance sheet information and the income statement for Pioneer Industri

Question

Selected balance sheet information and the income statement for Pioneer Industries for the current year are presented below Selected Balance Sheet Accounts Prior Year $23,400 32,000 2,200 18,200 4,400 Current Year $16,000 35,200 Accounts Receivable Inventories Prepaid Rent Accounts Payable Salaries and Wages Payable 23,600 6,600 Income Statement Sales Revenue Expenses: $480,000 Cost of Goods Sold Depreciation Expense Salaries Expense Rent Expense Insurance Expense Interest Expense Utilities Expense 276,000 32,000 48,000 19,200 19,200 17,600 16,000 52,000 Net Income Required Prepare the cash flows from operating activities section of the statement of cash flows using the indirect method. (Enter any deductions and cash outflows as a negative value.)

Explanation / Answer

The cash flows from operarting activities section of the statement of cash flows will be prepared in the following manner:

P Industries Cash Flows from Operating Income Net income 52000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense 32000 Changes in current assets and current liabilities: Decrease in accounts receivable ($23,400 - $16,000) 7400 Increase in inventories ($32,000 - $35,200) -3200 Decrease in prepaid rent ($2,200 - $0) 2200 Increase in accounts payable ($23,600 - $18,200) 5400 Increase in salaries and wages payable ($6,600 - $4,400) 2200 Net cash provided by operating activities 98000

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