Gemstone Distributors reports net income of $60,000. Included in that number is depreciation expense of $12,500 and a loss on the sale of land of $5,500. A comparison of this year's and last year's balance sheets reveals a decrease in accounts receivable of $30,000, a decrease in inventory of $17,500, and an increase in accounts payable of $50,000. Required: Prepare the operating activities section of the statement of cash flows using the indirect method. (Amounts to be deducted should b indicated with a minus sign.) Cash flows from operating activities: GEMSTONE DISTRIBUTORS Statement of Cash Flows (partial) Adjustments to reconcile net income to net cash flows from operating activities:

Gemstone Distributors reports net income of $60,000. Included in that number is depreciation expense of $12,500 and a loss on the sale of land of $5,500. A comparison of this year's and last year's balance sheets reveals a decrease in accounts receivable of $30,000, a decrease in inventory of $17,500, and an increase in accounts payable of $50,000. Required: Prepare the operating activities section of the statement of cash flows using the indirect method. (Amounts to be deducted should b indicated with a minus sign.) Cash flows from operating activities: GEMSTONE DISTRIBUTORS Statement of Cash Flows (partial) Adjustments to reconcile net income to net cash flows from operating activities:

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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The income statement disclosed the following items for the year: Depreciation expense $57,000 Gain on disposal of equipment 24,000 Net income 542,000 The changes in the current asset and liability accounts for the year are as follows: Increase(Decrease) Accounts receivable $9,800 Inventory (5,550) Prepaid insurance (1,000) Accounts payable (3,700) Income taxes payable 1,440 Dividends payable 2,200 a. Prepare the Cash Flows from (used for) 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.
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