Cash Flows from Operating Activities—Indirect Method The net income reported on the income statement for the current year was $127,200. Depreciation recorded on store equipment for the year amounted to $21,000. 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 $50,630 $46,070 Accounts receivable (net) 36,300 34,050 Inventories 49,570 51,830 Prepaid expenses 5,570 4,380 Accounts payable (merchandise creditors) 47,440 43,580 Wages payable 25,920 28,470 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 $fill in the blank ec5d5a033f89031_2 Adjustments to reconcile net income to net cash flow from operating activities: Depreciation fill in the blank ec5d5a033f89031_4 Changes in current operating assets and liabilities: Increase in accounts receivable fill in the blank ec5d5a033f89031_6 Decrease in inventories fill in the blank ec5d5a033f89031_8 Increase in prepaid expenses fill in the blank ec5d5a033f89031_10 Increase in accounts payable fill in the blank ec5d5a033f89031_12 Decrease in wages payable fill in the blank ec5d5a033f89031_14 Net cash flow from operating activities $fill in the blank ec5d5a033f89031_15

FINANCIAL ACCOUNTING

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ISBN:9781259964947

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Chapter1: Financial Statements And Business Decisions

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Cash Flows from Operating Activities—Indirect Method

The net income reported on the income statement for the current year was $127,200. Depreciation recorded on store equipment for the year amounted to $21,000. 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	$50,630		$46,070
Accounts receivable (net)	36,300		34,050
Inventories	49,570		51,830
Prepaid expenses	5,570		4,380
Accounts payable (merchandise creditors)	47,440		43,580
Wages payable	25,920		28,470

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	$fill in the blank ec5d5a033f89031_2
Adjustments to reconcile net income to net cash flow from operating activities:
Depreciation	fill in the blank ec5d5a033f89031_4
Changes in current operating assets and liabilities:
Increase in accounts receivable	fill in the blank ec5d5a033f89031_6
Decrease in inventories	fill in the blank ec5d5a033f89031_8
Increase in prepaid expenses	fill in the blank ec5d5a033f89031_10
Increase in accounts payable	fill in the blank ec5d5a033f89031_12
Decrease in wages payable	fill in the blank ec5d5a033f89031_14
Net cash flow from operating activities		$fill in the blank ec5d5a033f89031_15

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