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The income statement disclosed the following items for the year: Depreciation expense $40,700 Gain on disposal of equipment 23,760 Net income 309,600 The changes in the current asset and liability accounts for the year are as follows: Increase (Decrease) Accounts receivable $6,340 Inventory (3,610) Prepaid insurance (1,350) Accounts payable (4,300) Income taxes payable 1,350 Dividends payable 950 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 p avments decreases in cash any negative adiustments

The income statement disclosed the following items for the year: Depreciation expense $40,700 Gain on disposal of equipment 23,760 Net income 309,600 The changes in the current asset and liability accounts for the year are as follows: Increase (Decrease) Accounts receivable $6,340 Inventory (3,610) Prepaid insurance (1,350) Accounts payable (4,300) Income taxes payable 1,350 Dividends payable 950 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 p avments decreases in cash any negative adiustments

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 $40,700 Gain on disposal of equipment 23,760 Net income 309,600 The changes in the current asset and liability accounts for the year are as follows: Increase (Decrease) Accounts receivable $6,340 Inventory (3,610) Prepaid insurance (1,350) Accounts payable (4,300) Income taxes payable 1,350 Dividends payable 950 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:
Transcribed Image Text:Cash Flows from Operating Activities–Indirect Method The income statement disclosed the following items for the year: Depreciation expense $40,700 Gain on disposal of equipment 23,760 Net income 309,600 The changes in the current asset and liability accounts for the year are as follows: Increase (Decrease) Accounts receivable $6,340 Inventory (3,610) Prepaid insurance (1,350) Accounts payable (4,300) Income taxes payable 1,350 Dividends payable 950 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:
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: 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? of accounting. of accounting, whereas net income is computed using Cash flows from operating activities is based on
Transcribed Image Text: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: 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? of accounting. of accounting, whereas net income is computed using Cash flows from operating activities is based on
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