The following information related to comparative balance sheets is available for
ID: 2452940 • Letter: T
Question
The following information related to comparative balance sheets is available for Metro Corporation:
Increase in cash 50,000
Decrease in accounts receivable (15,000)
Decrease in Inventory (25,000)
Increase in prepaid insurance 11,000
Increase in accounts payable 10,000
Additional selected information from the income statement was also provided:
1. Depreciation expense of $20,000
2. A loss on sale of equipment $3,500
3. Net income $122,000
Prepare the cash flows from operating activities using the indirect method
Explanation / Answer
cash flow from operating activity Net income 122000 Adjustment to reconcile net income to cash flow from operating activity Add:Depreciation 20000 Loss on sale of equipment 3500 change in current asset /liabilities Decrease in receivable 15000 Decrease in inventory 25000 Increase in prepaid insurance (11000) Increase in payable 10000 Net cash provided/(used) by operating activity 184500
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