Question

The net income reported on the income statement of CamilloX Inc. for the current year was $150,000. Depreciation recorded on equipment and building amounted to $45,000 for the year.  Balances of the current asset and current liability accounts at the beginning and end of the year are as follows:

Account	End of Year	Beginning of Year
Cash	42,875	36,250
Trade Receivables (net)	147,500	137,500
Inventories	109,375	93,750
Prepaid Expenses	9,250	11,875
Accounts Payable	57,000	40,000
Salaries Payable	7,625	10,625
Dividends Payable	4,250	3,125
Interest Received on Investments	1,800	1,500

Prepare the cash flows from operating activities section of the statement of cash flows using the indirect method.

Answer 1

Cash Flow Statement by operating Activities by Indirect Method:

Particulars	Amount in $
Net Income for the Current Year	150,000
Add/(Less): Non Cash & Non Operating Items
Depreciation On Equipment & Building	45,000
Interest Received on Investments	(1,800)
Dividend	4,250
Cash Flow From Operations	197,450
Add/(Less): Increase or Decrease in Current Assets & Current Liabilities
Trade Receivables (147,500-137,500)	(10,000)
Inventory (109,375-93,750)	(15,625)
Prepaid Expenses (11,875-9250)	2,625
Accounts payable (57,000-40,000)	17,000
Salaries Payable (10,625-7,625)	(3,000)
Cash Flow From Operating Activities	190,450

Note: It is Assumed that Dividend Payable at the beginning of the year was paid in the current year & Dividend Payable at the end of the year is charged from Income Statement.

Note: It is Assumed that Interest Received on the investment at the beginning of the year was for current year & Interest Received on Investments at the end of the year is for upcoming year.