The net income reported on the income statement for the current year was $134,400. Depreciation recorded on store equipment for the year amounted to $22,200. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows: End Beginning of Year of Year Cash $53,220 $48,430 Accounts receivable (net) 38,160 35,790 Merchandise inventory 52,100 54,480 Prepaid expenses 5,850 4,600 Accounts payable (merchandise creditors) 49,870 45,810 Wages payable 27,250 29,930 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. Statement of Cash Flows (partial) Cash flows from operating activities: Adjustments to reconcile net income to net cash filows from (used for) operating activities: Changes in current operating assets and liabilities: Net cash flow from operating activities

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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The net income reported on the income statement for the current year was $134,400. Depreciation recorded on store equipment for the year amounted to $22,200. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows:

|                       | End of Year | Beginning of Year |
|-----------------------|-------------|-------------------|
| Cash                  | $53,220     | $48,430           |
| Accounts receivable (net) | 38,160  | 35,790            |
| Merchandise inventory | 52,100      | 54,480            |
| Prepaid expenses      | 5,850       | 4,600             |
| Accounts payable (merchandise creditors) | 49,870 | 45,810 |
| Wages payable         | 27,250      | 29,930            |

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.

**Statement of Cash Flows (partial)**

- Cash flows from operating activities: (Dropdown) $
- Adjustments to reconcile net income to net cash flows from (used for) operating activities:
  - (Dropdown) (Textbox)
  - Changes in current operating assets and liabilities: (Textbox) (Textbox)

- Net cash flow from operating activities: (Textbox)

b. Cash flows from operating activities differ from net income because it does not use the (Dropdown) of accounting. For example, revenues are recorded on the income statement when (Textbox).
Transcribed Image Text:The net income reported on the income statement for the current year was $134,400. Depreciation recorded on store equipment for the year amounted to $22,200. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows: | | End of Year | Beginning of Year | |-----------------------|-------------|-------------------| | Cash | $53,220 | $48,430 | | Accounts receivable (net) | 38,160 | 35,790 | | Merchandise inventory | 52,100 | 54,480 | | Prepaid expenses | 5,850 | 4,600 | | Accounts payable (merchandise creditors) | 49,870 | 45,810 | | Wages payable | 27,250 | 29,930 | 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. **Statement of Cash Flows (partial)** - Cash flows from operating activities: (Dropdown) $ - Adjustments to reconcile net income to net cash flows from (used for) operating activities: - (Dropdown) (Textbox) - Changes in current operating assets and liabilities: (Textbox) (Textbox) - Net cash flow from operating activities: (Textbox) b. Cash flows from operating activities differ from net income because it does not use the (Dropdown) of accounting. For example, revenues are recorded on the income statement when (Textbox).
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