16.3 #5 The net income reported on the income statement for the current year was

Question

16.3

#5

The net income reported on the income statement for the current year was $346,400. Depreciation recorded on equipment and a building amounted to $99,330 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

Amount Descriptions

Required:

End of Year

Beginning of Year

Cash $90,570 $96,530 Accounts receivable (net) 111,490 119,020 Inventories 222,910 208,840 Prepaid expenses 13,500 14,540 Accounts payable (merchandise creditors) 96,260 103,590 Salaries payable 15,150 12,980

Explanation / Answer

Cash flow from operating activities: Net income 346400 Adjustments to reconcile net income to net Cash flow from operating activities Depreciation expense 99330 Changes in current assets and liabilities: Decrease in accounts receivable 7530 Increase in inventories -14070 Decrease in prepaid expenses 1030 Decrease in accounts payable -7330 Increase in salaries payable 2170 Net cash flow from operating activities 435060 B No, the net cash flow from operating activities would have been the same

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