Oriole Co.’s current asset and liability balances for the past two years are as

Question

Oriole Co.’s current asset and liability balances for the past two years are as follows. Net income for 2016 was $1,209,600, and depreciation expense was $86,200.

Using the indirect method, prepare the cash flows provided by operating activities section of the statement of cash flows for 2016. (Show amounts that decrease cash flow with either a - sign, e.g. -15,000 or in parentheses, e.g. (15,000).)

Cash flows from operating activities

December 31, 2016 December 31, 2015 Accounts Receivable $450,140 $383,600 Inventories 668,600 729,400 Accounts Payable 380,000 328,500 Accrued Liabilities 92,330 111,800

Explanation / Answer

Cash flows from operating activities Net Income $ 1,209,600 Adjustments to reconcile net income to : Depreciation expenses $   86,200 Increase in accounts receivable $ (66,540) Decrease in inventory $   60,800 Increase in accounts payable $   51,500 Decrease In accrued liabilities $ (19,470) $        26,290 Net cash flow from operating activities $ 1,235,890

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