The income statement disclosed the following items for the year:Depreciation expense$57,400Gain on disposal of equipment33,510Net income494,300The changes in the current asset and liability accounts for the year are as follows: Increase(Decrease)Accounts receivable$8,950 Inventory(5,090) Prepaid insurance(1,910)Accounts payable(6,070)Income taxes payable1,910 Dividends payable1,340 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.

Cash flow statement under indirect method from operating activities is calculated by Taking net…

Answered: The income statement disclosed the…

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	$57,400
Gain on disposal of equipment	33,510
Net income	494,300

The changes in the current asset and liability accounts for the year are as follows:

	Increase (Decrease)
Accounts receivable	$8,950
Inventory	(5,090)
Prepaid insurance	(1,910)
Accounts payable	(6,070)
Income taxes payable	1,910
Dividends payable	1,340

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.

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