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Hardware Suppliers reports net income of $165,000. Included in net income is a gain on the sale of land of $20,000. A comparison of this year’s and last year’s balance sheets reveals an increase in accounts receivable of $35,000, an increase in inventory of $20,000, and a decrease in accounts payable of $55,000.Required:Prepare the operating activities section of the statement of cash flows using the indirect method. Do you see a pattern in Hardware Suppliers’ adjustments to net income to arrive at operating cash flows? What might this imply?

Hardware Suppliers reports net income of $165,000. Included in net income is a gain on the sale of land of $20,000. A comparison of this year’s and last year’s balance sheets reveals an increase in accounts receivable of $35,000, an increase in inventory of $20,000, and a decrease in accounts payable of $55,000.Required:Prepare the operating activities section of the statement of cash flows using the indirect method. Do you see a pattern in Hardware Suppliers’ adjustments to net income to arrive at operating cash flows? What might this imply?

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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Hardware Suppliers reports net income of $165,000. Included in net income is a gain on the sale of land of $20,000. A comparison of this year’s and last year’s balance sheets reveals an increase in accounts receivable of $35,000, an increase in inventory of $20,000, and a decrease in accounts payable of $55,000.

Required:
Prepare the operating activities section of the statement of cash flows using the indirect method. Do you see a pattern in Hardware Suppliers’ adjustments to net income to arrive at operating cash flows? What might this imply?

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