Cash Flows from Operating Activities—Indirect Method The net income reported on the income statement for the current year was $73,600. Depreciation recorded on store equipment for the year amounted to $27,400. 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 $23,500 $18,700 Accounts receivable (net) 56,000 48,000 Inventory 35,500 40,000 Prepaid expenses 4,750 7,000 Accounts payable (merchandise creditors) 21,800 16,800 Wages payable 4,900 5,800
Cash Flows from Operating Activities—Indirect Method The net income reported on the income statement for the current year was $73,600. Depreciation recorded on store equipment for the year amounted to $27,400. 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 $23,500 $18,700 Accounts receivable (net) 56,000 48,000 Inventory 35,500 40,000 Prepaid expenses 4,750 7,000 Accounts payable (merchandise creditors) 21,800 16,800 Wages payable 4,900 5,800
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
The net income reported on the income statement for the current year was $73,600.
| End of Year | Beginning of Year | |||
| Cash | $23,500 | $18,700 | ||
| 56,000 | 48,000 | |||
| Inventory | 35,500 | 40,000 | ||
| Prepaid expenses | 4,750 | 7,000 | ||
| Accounts payable (merchandise creditors) | 21,800 | 16,800 | ||
| Wages payable | 4,900 | 5,800 |
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) |
Transcribed Image Text:Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash flow from operating activities:
Depreciation v
Changes in current operating assets and liabilities:
Increase in accounts receivable v
Decrease in inventories v
Decrease in prepaid expenses
Increase in accounts payable v
Decrease in wages payable v
Net cash flow from operating activities
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