Chapter /3 229 EXERCISE 13-2 , The net income reported on the income statement o

Question

Chapter /3 229 EXERCISE 13-2 , The net income reported on the income statement of Hunter Inc. for the current year was $150,000. Depreciation recorded on equipment and building amounted to $45,000 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 f Year Cash Trade receivables (net)... Inventories . Prepaid expenses. Accounts payable (merchandise creditors. Salaries payable 42,875 $36,250 147,500 137,500 10937593. 9,250 11,875 57,000 40,000 7,625 10,625 Instructions: Prepare the cash flows from operating activities section of the statement of cash flows using the indirect methood

Explanation / Answer

Answer :- Calculation of Net cash flow from Operating Activities :-

Decrease in Salaries Payable

Net cash flow generated from Operating Activities

(3000)

186000

PARTICULARS AMOUNT ($) Net Income 45000 Adjustments to reconcile Net income to Net Cash provided by operating activities :- Depreciation Expense 45000 Increase in Accounts Receivable (Net) (10000) Increase in Inventories (15625) Decrease in prepaid Expenses 2625 Increase in Accounts Payable 17000

Decrease in Salaries Payable

Net cash flow generated from Operating Activities

(3000)

186000

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