The income statement disclosed the following items for the year:Depreciation expense$57,000Gain on disposal of equipment24,000Net income542,000The 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 payable1,440 Dividends payable2,200 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.

Cash Flows from Operating Activities Net Income $542,000 Adjustment to reconcile net…

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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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