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The net income reported on the income statement for the current year was $283,900. Depreciation recorded on equipment and a building amounted to $84,900 for the year. 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 $72,390 $76,730 Accounts receivable (net) 91,790 94,680 Inventories 180,980 163,130 Prepaid expenses 10,060 10,820 Accounts payable (merchandise creditors) 80,860 85,630 Salaries payable 11,650 10,670 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. Statement of Cash Flows (partial) Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash flow from operating activities: Depreciation Changes in current operating assets and liabilities: Decrease in accounts receivable Increase in inventories Decrease in prepaid expenses Decrease in accounts payable Increase in salaries payable Net cash flow from operating activities

The net income reported on the income statement for the current year was $283,900. Depreciation recorded on equipment and a building amounted to $84,900 for the year. 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 $72,390 $76,730 Accounts receivable (net) 91,790 94,680 Inventories 180,980 163,130 Prepaid expenses 10,060 10,820 Accounts payable (merchandise creditors) 80,860 85,630 Salaries payable 11,650 10,670 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. Statement of Cash Flows (partial) Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash flow from operating activities: Depreciation Changes in current operating assets and liabilities: Decrease in accounts receivable Increase in inventories Decrease in prepaid expenses Decrease in accounts payable Increase in salaries payable Net cash flow from operating activities

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 net income reported on the income statement for the current year was $283,900. Depreciation recorded on equipment and a building amounted to $84,900 for the year. 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 $72,390 $76,730 Accounts receivable (net) 91,790 94,680 Inventories 180,980 163,130 Prepaid expenses 10,060 10,820 Accounts payable (merchandise creditors) 80,860 85,630 Salaries payable 11,650 10,670 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. Statement of Cash Flows (partial) Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash flow from operating activities: Depreciation Changes in current operating assets and liabilities: Decrease in accounts receivable Increase in inventories Decrease in prepaid expenses Decrease in accounts payable Increase in salaries payable Net cash flow from operating activities
Transcribed Image Text:Cash Flows from Operating Activities-Indirect Method The net income reported on the income statement for the current year was $283,900. Depreciation recorded on equipment and a building amounted to $84,900 for the year. 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 $72,390 $76,730 Accounts receivable (net) 91,790 94,680 Inventories 180,980 163,130 Prepaid expenses 10,060 10,820 Accounts payable (merchandise creditors) 80,860 85,630 Salaries payable 11,650 10,670 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. Statement of Cash Flows (partial) Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash flow from operating activities: Depreciation Changes in current operating assets and liabilities: Decrease in accounts receivable Increase in inventories Decrease in prepaid expenses Decrease in accounts payable Increase in salaries payable Net cash flow from operating activities
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