Chew Corporation prepares its statement of cash flows using the indirect method

Question

Chew Corporation prepares its statement of cash flows using the indirect method of reporting operating activi- ash ties. Net income for the 2018 fiscal year was $1,250,000. Depreciation expense of S140,000 was included with operating expenses in the income statement. The following information describes the changes in current assets and liabilities other than cash: Increase in accounts receivable Decrease in inventories Decrease prepaid expenses Decrease in salaries payable Increase in income taxes payable $152,000 108,000 62,000 30,000 44,000 Required Calculate cash flows from operating activities for 2018

Explanation / Answer

Calculation of cash flows from Operating activities for 2018:

Particulars Amount ($) Net Income $1,250,000 Add: Non cash expenditure - Depreciation $140,000 Add/Less: Change in working capital Increase in account receivable ($152,000) Decrease in inventory $108,000   Decrease in prepaid expenses $62,000 Decrease in salaries payable ($30,000) Increase in income tax payable $44,000 $32,000 Cash Flows From Operating Activities $1,422,000

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