Using the indirect method, calculate the amount of cash flows from operating activities from the following data: Net Income$199,000 Beginning Accounts receivable 22,000 ending accounts recievable29,000 Beginning Prepaid insurance5,000 Ending prepaid insurance2,000 Beginning Accounts payable15,000 Ending Accounts payable 14,000 Depreciation expense50,000 Amortization of intangible asset6,000 dividends declared and paid11,000

Solution: Using the indirect method, Computation of cash flows from operating activities is as under:Statement of Cash Flows (Partial) Particulars Details Amount Cash Flow from Operating Activities: Net Income $199,000.00 Adjustments to reconcile net income to net cash provided by operations: Depreciation Expense $50,000.00 Amortization expense $6,000.00 Increase in accounts receivables ($29,000 - $22,000) -$7,000.00 Decrease in prepaid insurance ($5,000 - $2,000) $3,000.00 Decrease in accounts payable ($15,000 - $14,000) -$1,000.00 $51,000.00 Net Cash provided by operating activities $250,000.00

Answered: Using the indirect method, calculate…

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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Using the indirect method, calculate the amount of cash flows from operating activities from the following data:

		Net Income	$199,000
		Beginning Accounts receivable	22,000
		ending accounts recievable	29,000
		Beginning Prepaid insurance	5,000
		Ending prepaid insurance	2,000
		Beginning Accounts payable	15,000
		Ending Accounts payable	14,000
		Depreciation expense	50,000
		Amortization of intangible asset	6,000
		dividends declared and paid	11,000

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