Cash Flows from Operating Activities-Indirect Method The net income reported on the income statement for the current year was $153,600. Depreciation recorded on store equipment for the year amounted to $25,300. 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 $59,440 $54,680 Accounts receivable (net) 42,620 40,410 Merchandise inventory 58,190 61,520 Prepaid expenses 6,540 5,190 Accounts payable (merchandise creditors) 55,700 51,730 Wages payable 33,790 30,430 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. Statement of Cash Flows (partial) Cash flows from operating activities: Adjustments to reconcile net income to net cash flow from operating activities: Changes in current operating assets and liabilities: Net cash flow from operating activities Statement of Cash Flows (partial) Cash flows from operating activities: Adjustments to reconcile net income to net cash flow from operating activities: Changes in current operating assets and liabilities: Net cash flow from operating activities b. Cash flows from operating activities differs from net income because it does not use the of accounting. For example revenues are recorded on the income statement when
Cash Flows from Operating Activities-Indirect Method The net income reported on the income statement for the current year was $153,600. Depreciation recorded on store equipment for the year amounted to $25,300. 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 $59,440 $54,680 Accounts receivable (net) 42,620 40,410 Merchandise inventory 58,190 61,520 Prepaid expenses 6,540 5,190 Accounts payable (merchandise creditors) 55,700 51,730 Wages payable 33,790 30,430 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. Statement of Cash Flows (partial) Cash flows from operating activities: Adjustments to reconcile net income to net cash flow from operating activities: Changes in current operating assets and liabilities: Net cash flow from operating activities Statement of Cash Flows (partial) Cash flows from operating activities: Adjustments to reconcile net income to net cash flow from operating activities: Changes in current operating assets and liabilities: Net cash flow from operating activities b. Cash flows from operating activities differs from net income because it does not use the of accounting. For example revenues are recorded on the income statement when
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Cash Flows from Operating Activities-Indirect Method
The net income reported on the income statement for the current year was $153,600. Depreciation recorded on store equipment for the year amounted to $25,300.
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
$59,440
$54,680
Accounts receivable (net)
42,620
40,410
Merchandise inventory
58,190
61,520
Prepaid expenses
6,540
5,190
Accounts payable (merchandise creditors)
55,700
51,730
Wages payable
33,790
30,430
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.
Statement of Cash Flows (partial)
Cash flows from operating activities:
Adjustments to reconcile net income to net cash flow from operating activities:
Changes in current operating assets and liabilities:
Net cash flow from operating activities
Transcribed Image Text:Statement of Cash Flows (partial)
Cash flows from operating activities:
Adjustments to reconcile net income to net cash flow from operating activities:
Changes in current operating assets and liabilities:
Net cash flow from operating activities
b. Cash flows from operating activities differs from net income because it does not use the
of accounting. For example revenues are recorded on
the income statement when
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