3. Accrual to Cash Basis. Exercise 16-3 from the textbook. Fill in the following

Question

3. Accrual to Cash Basis. Exercise 16-3 from the textbook. Fill in the following chart, showing how increases and decreases in these accounts affect the conversion of accrual basis income to cash basis income Add Deduct Accounts Receivable Merchandise Inventory Prepaid Expenses Accounts Payable Accrued Liabilities Payable 4. Cash Flow from Operating Activities Exercise 16-4 from the textbook. The income statement of a company shows net income of $200,000, merchandise inventory on January 1 was $76,500 and on December 31 was $94,500; accounts payable for merchandise purchases were $57,000 on January 1 and $68,000 on December 31. Compute the cash flows from operating activities under the indirect method.

Explanation / Answer

1) Fill schedule :

4) Cash flow from operating activities :

Add Deduct Account receivable Decrease Increase Merchandise inventory Decrease Increase Prepaid expense Decrease Increase Account payable Increase Decrease Accured liabilties payale Increase Decrease

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