The net income reported on the income statement for the current year was $58,000
ID: 2610681 • Letter: T
Question
The net income reported on the income statement for the current year was $58,000. Depreciation recorded on equipment and a building amount to $24,000 for the year. Balances of the current asset and current liabilities accounts at the beginning and end of the year are as follows:
End of Year
Beginning of Year
Change
Cash
$65,000
$70,000
Accounts receivable (net)
70,000
63,000
Inventories
85,000
102,000
Prepaid expenses
4,000
4,500
Accounts payable
(merchandise creditors)
50,000
58,000
Salaries payable
7,500
6,000
Cash dividends payable
4,500
6,500
Prepare the Cash flows for Operating Activities section of the statement of cash flows, using the indirect method
End of Year
Beginning of Year
Change
Cash
$65,000
$70,000
Accounts receivable (net)
70,000
63,000
Inventories
85,000
102,000
Prepaid expenses
4,000
4,500
Accounts payable
(merchandise creditors)
50,000
58,000
Salaries payable
7,500
6,000
Cash dividends payable
4,500
6,500
Explanation / Answer
Solution:
Cash Flows from operating activities 58,000 Net income, per income statement Add: Depreciation 24,000 Decrease in inventories 17,000 Decrease in prepaid expenses 500 Increase in salaries payable 1,500 43000 Deduct: Increase in accounts receivable (net) 7,000 Decrease in accounts payable 8,000 -15,000 Net cash fow from operating activities 86,000Related Questions
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