The current sections of Bellinham Inc.’s balance sheets atDecember 31, 2006 and

Question

The current sections of Bellinham Inc.’s balance sheets atDecember 31, 2006 and 2007, are presented here.

Bellinham’s net income for 2007 was $153,000. Depreciationexpense was $24,000.

Complete the net cash provided by operating activities sectionof the company’s statement of cash flows for the year endedDecember 31,2007, using the indirect method. (Ifthe amount reduces cash flow enter the number with a - signpreceding the number ie: -14,500.)

$

2007 2006 Current assets Cash $105,000 $ 99,000 Accounts receivable 110,000 89,000 Inventory 158,000 172,000 Prepaid expenses 27,000 22,000 Total current assets $400,000 $382,000 Current liabilities Accrued expensespayable $ 15,000 $ 5,000 Accounts payable 85,000 92,000 Total current liabilities $100,000 $ 97,000

Explanation / Answer

BELLINHAM, INC

Partial statement of cashflows

For the year ended Dec31,2007

BELLINHAM, INC

Partial statement of cashflows

For the year ended Dec31,2007

Cash flows from operatingactivities Net Income $153,000 Adjustment to reconcile net income cash provided by operatingactivities Add: Depreciation expense $24,000 Operating profit before Working capitalchanges $177,000 ( - ) Increase in accounts receivable ($21,000) ( + ) Decrease in Inventory $14,000 ( - ) Increase in Prepaid expense ($5,000) ( + ) Increase in accrued expense payble $10,000 ( - ) Decrease in accounts payable ($7,000) ($9,000) Net cash provided by operatingactivities $168,000

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