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Cash Flows from Operating Activities-Indirect Method The income statement disclosed the following items for the year: Depreciation expense $39,100 Gain on disposal of equipment 22,840 Net income 291,400 The changes in the current asset and liability accounts for the year are as follows: Increase (Decrease) Accounts receivable $6,100 Inventory (3,470) Prepaid insurance (1,300) Accounts payable (4,130) Income taxes payable 1,300 Dividends payable 910 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 out flows, cash payments, decreases in cash, or any negative adjustments. Statement of Cash Flows (partial) Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash flow from operating activities: Depreciation Gain on disposal of equipment Changes in current operating assets and liabilities: Increase in accounts receivable Decrease in inventory Decrease in prepaid insurance Decrease in accounts payable Increase in income taxes payable Net cash flow from operating activities

Cash Flows from Operating Activities-Indirect Method The income statement disclosed the following items for the year: Depreciation expense $39,100 Gain on disposal of equipment 22,840 Net income 291,400 The changes in the current asset and liability accounts for the year are as follows: Increase (Decrease) Accounts receivable $6,100 Inventory (3,470) Prepaid insurance (1,300) Accounts payable (4,130) Income taxes payable 1,300 Dividends payable 910 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 out flows, cash payments, decreases in cash, or any negative adjustments. Statement of Cash Flows (partial) Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash flow from operating activities: Depreciation Gain on disposal of equipment Changes in current operating assets and liabilities: Increase in accounts receivable Decrease in inventory Decrease in prepaid insurance Decrease in accounts payable Increase in income taxes payable Net cash flow from operating activities

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Cash Flows from Operating Activities-Indirect Method The income statement disclosed the following items for the year: Depreciation expense $39,100 Gain on disposal of equipment 22,840 Net income 291,400 The changes in the current asset and liability accounts for the year are as follows: Increase (Decrease) Accounts receivable $6,100 Inventory (3,470) Prepaid insurance (1,300) Accounts payable (4,130) Income taxes payable 1,300 Dividends payable 910 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 out flows, cash payments, decreases in cash, or any negative adjustments. Statement of Cash Flows (partial) Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash flow from operating activities: Depreciation Gain on disposal of equipment nanges in current operating assets liabilities: Increase in accounts receivable Decrease in inventory Decrease in prepaid insurance Decrease in accounts payable Increase in income taxes payable Net cash flow from operating activities
Transcribed Image Text:Cash Flows from Operating Activities-Indirect Method The income statement disclosed the following items for the year: Depreciation expense $39,100 Gain on disposal of equipment 22,840 Net income 291,400 The changes in the current asset and liability accounts for the year are as follows: Increase (Decrease) Accounts receivable $6,100 Inventory (3,470) Prepaid insurance (1,300) Accounts payable (4,130) Income taxes payable 1,300 Dividends payable 910 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 out flows, cash payments, decreases in cash, or any negative adjustments. Statement of Cash Flows (partial) Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash flow from operating activities: Depreciation Gain on disposal of equipment nanges in current operating assets liabilities: Increase in accounts receivable Decrease in inventory Decrease in prepaid insurance Decrease in accounts payable Increase in income taxes payable Net cash flow from operating activities
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