Cash Flows from Operating ActivitiesIndirect Method The net income reported on the income statement for...
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Accounting
Cash Flows from Operating ActivitiesIndirect Method
The net income reported on the income statement for the current year was $209,200. Depreciation recorded on equipment and a building amounted to $62,600 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 of Year
Cash
$54,810
$57,550
Accounts receivable (net)
69,500
71,020
Inventories
137,030
122,350
Prepaid expenses
7,620
8,110
Accounts payable (merchandise creditors)
61,220
64,230
Salaries payable
8,820
8,000
Question Content Area
a. Prepare the "Cash Flows from Operating Activities" section of the statement of cash flows, using the indirect method. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments.
Cash flows from operating activities:
Decrease in prepaid expenses
Depreciation
Increase in inventories
Net income
$_____
Adjustments to reconcile net income to net cash flow from operating activities:
Decrease in accounts payable
Decrease in accounts receivable
Depreciation
Increase in accounts receivable
______
Changes in current operating assets and liabilities:
Decrease in accounts receivable
Decrease in salaries payable
Depreciation
Increase in accounts receivable
______
Decrease in inventories
Increase in accounts receivable
Increase in inventories
Increase in prepaid expenses
______
Decrease in prepaid expenses
Increase in accounts payable
Increase in accounts receivable
Increase in prepaid expenses
______
Decrease in accounts payable
Decrease in salaries payable
Depreciation
Increase in accounts payable
______
Decrease in salaries payable
Increase in accounts receivable
Increase in prepaid expenses
Increase in salaries payable
______
Net cash flow from operating activities
$______
Question Content Area
b. If the direct method had been used, would the net cash flow from operating activities have been the same? (No, Yes)
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