Cengage , CengageNow2lOnlinx eChegg Study!Guided S: v2.cengagenow.com/Im/takeAss

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Cengage , CengageNow2lOnlinx eChegg Study!Guided S: v2.cengagenow.com/Im/takeAssig takeAssignment Main.do?invoker= ass nts&itakeAssi; sion Locator= assignment-take&inprogress;= false HOMEWORK 14 14 Show Me How Calculator Print item Cash flows from operating activities-indirect method 1. PE.14-1.B 2. PE. 14-2.B 3. PE.14-3.B 4. PE. 14-4.B 5. PE. 14-5.B 6. EX. 14-1 7. EX.143 8. Ex 14-5.Algo 9. Ex 14-6.Algo 10. EX.14-15 ALGO 11. Pr.14-1.Algo 12. Pr.14-2. Algo Amount Statement of Cash Flows-Operating Activities Instructions The net income reported on the income statement for the current year was $434,100. Depreciation recorded on store equipment for the yea amounted to $14,810. 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 Accounts receivable (net) Merchandise inventory Prepaid expenses Accounts payable (merchandise creditors) Wages payable $42,120 31,630 38,660 .MK) 39,020 21,280 37,180 29,180 43,310 3,480 36,770 23,560 Required A. Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method. Refer to the Amount Descriptions fist provided for the exact wording of the answer choices for text entries. Use the minus sign to indicate cash outflows, cash payments, decreases in cash and for any adjustments,required. B. Briefly explain why net cash flow from operating activities is different than net income. Check My Work Previous Next Progress: 8/12 items O Type here to search S:54 PM 11/10/2017

Explanation / Answer

Statement of Cash flow (Partial) Cash flow from operating activities Net Income $434,100 Adjustments to reconcile net income to net cash flow from operating activities Depreciation $14,810 Changes in current operating assets and liabilities Increase in Accounts Receivable (net) -$2,450 Decrease in Merchandise Inventory $4,650 Increase in prepaid expenses -$1,320 Increase in Accounts Payable $2,250 Decrease in Wages Payable -$2,280 Net Cash available from Operating activities $449,760 Reason for difference between Net Income and Net Cash flow from Operating activities : Net Income is calculated by substracting cost of sales , oeprational expenses,depreciation,amortization ,interest and taxes from total revenue. Net Cash flow from operating activities is calculated by the sum of net income ,adjustments for non cash expenses and changes in working capital. Non cash expenses such as depreciation , amortization must be included to calculate net profit ,but such costs do not reduce the amount of cash a company generate in a given period.

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