Cash Flows from Operating Activities—Indirect Method The net income reported on
ID: 2473568 • Letter: C
Question
Cash Flows from Operating Activities—Indirect Method The net income reported on the income statement for the current year was $314,900. Depreciation recorded on equipment and a building amounted to $94,200 for the year. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows: End of Year Beginning of Year Cash $83,130 $88,950 Accounts receivable (net) 105,410 109,760 Inventories 207,830 189,110 Prepaid expenses 11,560 12,540 Accounts payable (merchandise creditors) 92,860 99,270 Salaries payable 13,380 12,360
a. Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method. Use the minus sign to indicate cash out flows, cash payments, decreases in cash and for any adjustments, if required.
Statement of Cash Flows (partial) ?
Cash flows from operating activities:
_______________________________ $______________
Adjustments to reconcile net income to net cash flow from operating activities:
_______________________________ $______________
Changes in current operating assets and liabilities:
_______________________________ $______________
_______________________________ $______________
_______________________________ $______________
_______________________________ $______________
_______________________________ $______________
Net cash flow from operating activities: $_______________
Explanation / Answer
Statement of cash flow is prepared as under:
XYZ Company Statement of Cash Flows As of Dec 31,20XX Particulars Amount ($) Amount ($) Net Income 3,14,900 Adjustments to reconcile net income to net cash flow from operating activities: Add: Depreciation 94,200 Changes in current operating assets and liabilities: Decrease in Accounts Receivable 4,350 Increase in inventory 18,720 Decrease in prepaid expense 980 Decrease in Accounts Payable 6,410 Increase in salaries payable 1,020 75,420 Net Cash flows from operating activities 3,90,320Related Questions
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