Cash Flows from Operating Activities—Indirect MethodThe net income reported on the income statement for...

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Accounting

Cash Flows from Operating Activities—Indirect Method
The net income reported on the income statement for the currentyear was $144,400. Depreciation recorded on store equipment for theyear amounted to $23,800. Balances of the current asset and currentliability accounts at the beginning and end of the year are asfollows:
End of Year Beginning of Year
Cash $57,180 $52,030
Accounts receivable (net) 41,000 38,450
Merchandise inventory 55,980 58,530
Prepaid expenses 6,290 4,940
Accounts payable (merchandise creditors) 53,580 49,220
Wages payable 29,280 32,150
a. Prepare the Cash Flows from OperatingActivities section of the statement of cash flows, using theindirect 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 netcash flow from operating activities:
Changes in current operating assets andliabilities:
Net cash flow from operatingactivities $
b. Cash flows from operating activities differsfrom net income because it does not use the of accounting. Forexample revenues are recorded on the income statement when .

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4.0 Ratings (722 Votes)

a

Statement of Cash Flows (partial)
Cash flows from operating activities:
Net income	144400
Adjustments to reconcile net income to net cash flow from operating activities:
Depreciation expense	23800
Changes in current operating assets and liabilities:
Increase in accounts receivable	-2550
Decrease in merchandise inventory	2550
Increase in prepaid expenses	-1350
Increase in accounts payable	4360
Decrease in wages payable	-2870
Net cash flow from operating activities		168340

b
Cash flows from operating activities differs from net income because it does not use the accrual basis of accounting. For example revenues are recorded on the income statement when they are earned

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Transcribed Image Text

In: AccountingCash Flows from Operating Activities—Indirect MethodThe net income reported on the income statement for the...Cash Flows from Operating Activities—Indirect MethodThe net income reported on the income statement for the currentyear was $144,400. Depreciation recorded on store equipment for theyear amounted to $23,800. Balances of the current asset and currentliability accounts at the beginning and end of the year are asfollows:End of YearBeginning of YearCash$57,180$52,030Accounts receivable (net)41,00038,450Merchandise inventory55,98058,530Prepaid expenses6,2904,940Accounts payable (merchandise creditors)53,58049,220Wages payable29,28032,150a. Prepare the Cash Flows from OperatingActivities section of the statement of cash flows, using theindirect method. Use the minus sign to indicate cash out flows,cash payments, decreases in cash, or any negative adjustments.Statement of Cash Flows (partial)Cash flows from operating activities:$Adjustments to reconcile net income to netcash flow from operating activities:Changes in current operating assets andliabilities:Net cash flow from operatingactivities$b. Cash flows from operating activities differsfrom net income because it does not use the of accounting. Forexample revenues are recorded on the income statement when .

	End of Year	Beginning of Year
Cash	$57,180	$52,030
Accounts receivable (net)	41,000	38,450
Merchandise inventory	55,980	58,530
Prepaid expenses	6,290	4,940
Accounts payable (merchandise creditors)	53,580	49,220
Wages payable	29,280	32,150


Statement of Cash Flows (partial)

Cash flows from operating activities:
	$
Adjustments to reconcile net income to netcash flow from operating activities:

Changes in current operating assets andliabilities:





Net cash flow from operatingactivities		$