The income statement of Vince Gill Company is shown below. Accounts receivable d

Question

The income statement of Vince Gill Company is shown below. Accounts receivable decreased $314,250 during the year. Prepaid expenses increased $174,410 during the year. Accounts payable to suppliers of merchandise decreased $279,470 during the year. Accrued expenses payable decreased $122,500 during the year. Administrative expenses include depreciation expense of $52,640. Prepare the operating activities section of the statement of cash flows for the year ended for Vince Gill Company, using the indirect method. (Show amounts that decrease cast - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Explanation / Answer

Answer:

Working note:

All other amounts are given in the problem but inventory calculation is done as follows:

Decrease in inventory = Ending inventory - Beginning inventory

VINCE GILL COMPANY Partial statement of cash flow For the Year Ended December 31, 2014 Cash flows from operating activities: Net income 1051740 Adjustment to reconcile net income to net cash provided by operating activities: Add: Depreciation expense 52640 Add: Decrease in accounts receivable 314250 Add: decrease in inventory 291900 Less: Increase in prepaid expenses 174410 Less: Decrease in accounts payable 279470 Less: Decrease in accrued expenses payable 122500 Net cash provided by operating activities 1134150

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