The current sections of Iron Flower, Inc.\'s balance sheets at December 31, 2016

Question

The current sections of Iron Flower, Inc.'s balance sheets at December 31, 2016 and 2017, are presented below. Iron Flower's net income for 2017 was $216,000. Depreciation expense was $34,000. 2017 2016 Current assets Cash $106,000 $99,000 Accounts receivable 91,000 89,000 Inventory 168,000 173,000 Prepaid insurance 28,000 22,000 Total current assets $393,000 $383,000 Current Liabilities Interest payable $13,000 $5,000 Accounts payable 85,000 92,000 Total current liabilities $98,000 $97,000 Instructions:

Prepare the net cash provided by operating activities section of the company's statement of cash flows for the year ended December 31, 2017, using the indirect method. Be sure and prepare a heading.

Explanation / Answer

Cash flows from operating activities Particulars Amount $ Amount $ Net Income     216,000 Non cash Non operating Items Add: Depreciation        34,000       34,000 Decrease in current assets and increase in current liabilities Decrease in inventory          5,000 Increase in interest payable          8,000       13,000 Less: Increase in current assets and decrease in current liabilities Increase in accounts receivable        (2,000) Increase in prepaid insurance        (6,000) Decrease in accounts payable        (7,000)     (15,000) Net cash provided by operating activities     248,000

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