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The income statement disclosed the following items for the year: Depreciation expense $37,100 Gain on disposal of equipment 21,650 Net income 287,700 The changes in the current asset and liability accounts for the year are as follows: Increase (Decrease) Accounts receivable $5,780 Inventory (3,290) Prepaid insurance (1,230) Accounts payable (3,920) Income taxes payable 1,230 Dividends payable 870 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 outflows, cash payments, decreases in cash, or any negative adjustments.

The income statement disclosed the following items for the year: Depreciation expense $37,100 Gain on disposal of equipment 21,650 Net income 287,700 The changes in the current asset and liability accounts for the year are as follows: Increase (Decrease) Accounts receivable $5,780 Inventory (3,290) Prepaid insurance (1,230) Accounts payable (3,920) Income taxes payable 1,230 Dividends payable 870 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 outflows, cash payments, decreases in cash, or any negative adjustments.

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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### Cash Flows from Operating Activities—Indirect Method The income statement disclosed the following items for the year: - **Depreciation expense:** $37,100 - **Gain on disposal of equipment:** $21,650 - **Net income:** $287,700 The changes in the current asset and liability accounts for the year are as follows: #### Increase (Decrease) - **Accounts receivable:** $5,780 - **Inventory:** ($3,290) - **Prepaid insurance:** ($1,230) - **Accounts payable:** ($3,920) - **Income taxes payable:** $1,230 - **Dividends payable:** $870 **a.** Prepare the Cash Flows from Operating Activities section of the [statement of cash flows](https://www.investopedia.com/terms/s/statement-cash-flows.asp), using the indirect method. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments. ### Statement of Cash Flows (partial) #### For the year ended Dec. 31, -- ##### Cash flows from operating activities:
Transcribed Image Text:### Cash Flows from Operating Activities—Indirect Method The income statement disclosed the following items for the year: - **Depreciation expense:** $37,100 - **Gain on disposal of equipment:** $21,650 - **Net income:** $287,700 The changes in the current asset and liability accounts for the year are as follows: #### Increase (Decrease) - **Accounts receivable:** $5,780 - **Inventory:** ($3,290) - **Prepaid insurance:** ($1,230) - **Accounts payable:** ($3,920) - **Income taxes payable:** $1,230 - **Dividends payable:** $870 **a.** Prepare the Cash Flows from Operating Activities section of the [statement of cash flows](https://www.investopedia.com/terms/s/statement-cash-flows.asp), using the indirect method. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments. ### Statement of Cash Flows (partial) #### For the year ended Dec. 31, -- ##### Cash flows from operating activities:
# Statement of Cash Flows (partial) ## For the year ended Dec. 31, -- **Cash flows from operating activities:** --- --- **Adjustments to reconcile net income to net cash flow from operating activities:** --- --- **Changes in current operating assets and liabilities:** --- --- --- --- --- --- --- **Net cash flow from operating activities:** --- --- **b. Why is net cash flows from operating activities different than net income?** Cash flows from operating activities is based on __________ of accounting, whereas net income is computed using __________ of accounting.
Transcribed Image Text:# Statement of Cash Flows (partial) ## For the year ended Dec. 31, -- **Cash flows from operating activities:** --- --- **Adjustments to reconcile net income to net cash flow from operating activities:** --- --- **Changes in current operating assets and liabilities:** --- --- --- --- --- --- --- **Net cash flow from operating activities:** --- --- **b. Why is net cash flows from operating activities different than net income?** Cash flows from operating activities is based on __________ of accounting, whereas net income is computed using __________ of accounting.
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