Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. cash flows from operating activitiesindirect metho

Cash Flows from Operating ActivitiesIndirect Method The net income reported on the income statement for...

90.2K

Verified Solution

Question

Accounting

Cash Flows from Operating ActivitiesIndirect Method

The net income reported on the income statement for the current year was $209,200. Depreciation recorded on equipment and a building amounted to $62,600 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 $54,810 $57,550
Accounts receivable (net) 69,500 71,020
Inventories 137,030 122,350
Prepaid expenses 7,620 8,110
Accounts payable (merchandise creditors) 61,220 64,230
Salaries payable 8,820 8,000

Question Content Area

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 flows from operating activities:

Decrease in prepaid expenses

Depreciation

Increase in inventories

Net income

 $_____
Adjustments to reconcile net income to net cash flow from operating activities:

Decrease in accounts payable

Decrease in accounts receivable

Depreciation

Increase in accounts receivable

 ______
Changes in current operating assets and liabilities:

Decrease in accounts receivable

Decrease in salaries payable

Depreciation

Increase in accounts receivable

 ______

Decrease in inventories

Increase in accounts receivable

Increase in inventories

Increase in prepaid expenses

 ______

Decrease in prepaid expenses

Increase in accounts payable

Increase in accounts receivable

Increase in prepaid expenses

 ______

Decrease in accounts payable

Decrease in salaries payable

Depreciation

Increase in accounts payable

 ______

Decrease in salaries payable

Increase in accounts receivable

Increase in prepaid expenses

Increase in salaries payable

 ______
Net cash flow from operating activities $______

Question Content Area

b. If the direct method had been used, would the net cash flow from operating activities have been the same? (No, Yes)

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students