The net income reported on the income statement for the current year was $361,300. Depreciation recorded...

The net income reported on the income statement for the current year was $361,300. Depreciation recorded on store equipment for the year amounted to $15,520. 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

$40,180

$40,070

Accounts receivable (net)

30,070

28,060

Merchandise inventory

40,390

45,420

Prepaid expenses

3,470

4,840

Accounts payable (merchandise creditors)

38,610

37,710

Wages payable

20,330

24,800

Required:

Prepare the Cash Flows from Operating Activities section of the statement of cash flows <javascript:void(0)>, using the indirect method. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Use the minus sign to indicate cash outflows, cash payments, decreases in cash and for any adjustments, if required.

Briefly explain why net cash flow from operating activities is different from net income.

Solutions

Expert Solution

Answer-A)-

STATEMENT OF CASH FLOWS PARTIAL (USING INDIRECT METHOD)
FOR THE YEAR ENDED

Particulars		Amount
		$
Cash flow from operating activities
Net Income		361300
Adjustments to reconcile net income to net cash provided by operating activities
Adjustment for non cash effects

Depreciation		15520

Change in operating assets & liabilities

Decrease in merchandie inventory		5030
Increase in accounts payable		900
Increase in accounts receivable		-2010
Decrease in prepaid expenses		1370
Decrease in wages payable		-4470

Net cash flow from operating activities		377640

Answer-B)- Net cash flow from operating activities is totally different from net income because cash flows from operating activities section makes adjustments to net income and excludes non-cash expenses like depreciation, amortization and changes in working capital.

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

The net income reported on the income statement for the current year was $121,900. Depreciation recorded...

The net income reported on the income statement for the current year was $121,900. Depreciation recorded on store equipment for the year amounted to $20,100. 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 $47,050 $42,820 Accounts receivable (net) 33,730 31,640 Inventories 46,060 48,170 Prepaid expenses 5,180 4,070 Accounts payable (merchandise creditors) 44,090 40,510 Wages payable 24,090 26,460 a. Prepare the “Cash...

The net income reported on the income statement for the current year was $121,600. Depreciation recorded...

The net income reported on the income statement for the current year was $121,600. Depreciation recorded on store equipment for the year amounted to $20,100. 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 $49,490 $45,530 Accounts receivable (net) 35,480 33,650 Inventories 48,450 51,220 Prepaid expenses 5,440 4,330 Accounts payable (merchandise creditors) 46,370 43,070 Wages payable 25,340 28,140 a. Prepare the Cash...

The net income reported on the income statement for the current year was $313,900. Depreciation recorded...

The net income reported on the income statement for the current year was $313,900. Depreciation recorded on equipment and a building amounted to $93,900 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 $80,360 $84,380 Accounts receivable (net) 101,900 104,120 Inventories 200,900 179,390 Prepaid expenses 11,170 11,900 Accounts payable (merchandise creditors) 89,760 94,170 Salaries payable 12,940 11,730 a. Prepare...

The net income reported on the income statement for the current year was $318,700. Depreciation recorded...

The net income reported on the income statement for the current year was $318,700. Depreciation recorded on equipment and a building amounted to $93,980 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 $90,370 $95,280 Accounts receivable (net) 111,660 118,570 Inventories 232,780 203,250 Prepaid expenses 12,000 15,310 Accounts payable (merchandise creditors) 96,420 104,940 Salaries payable 15,310 13,420 Required: A....

The net income reported on the income statement for the current year was $153,400. Depreciation recorded...

The net income reported on the income statement for the current year was $153,400. Depreciation recorded on store equipment for the year amounted to $25,300. 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 $61,820 $56,260 Accounts receivable (net) 44,320 41,580 Inventories 60,520 63,290 Prepaid expenses 6,800 5,340 Accounts payable (merchandise creditors) 57,930 53,220 Wages payable 31,650 34,770 a. Prepare the “Cash...

The net income reported on the income statement for the current year was $330,400. Depreciation recorded...

The net income reported on the income statement for the current year was $330,400. Depreciation recorded on equipment and a building amounted to $105,140 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 $89,900 $95,010 Accounts receivable (net) 111,940 117,700 Inventories 217,550 209,050 Prepaid expenses 13,290 14,160 Accounts payable (merchandise creditors) 95,060 103,580 Salaries payable 15,590 13,710 Required: A....

The net income reported on the income statement for the current year was $210,000. Depreciation recorded on...

The net income reported on the income statement for the current year was $210,000. Depreciation recorded on equipment and a building amount to $62,500 for the year. Balances of the current asset and current liabilities accounts at the beginning and end of the year are as follows: End of Year Beginning of Year Cash $ 56,000 $ 59,500 Accounts receivable (net) 71,000 73,400 Inventories 140,000 126,500 Prepaid expenses 7,800 8,400 Accounts payable (merchandise creditors) 62,600 66,400 Salaries payable 9,000 8,250 ...

The net income reported on the income statement for the current year was $257,354. Depreciation recorded...

The net income reported on the income statement for the current year was $257,354. Depreciation recorded on fixed assets and amortization of patents for the year were $38,458 and $8,183, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows: End Beginning Cash $38,512 $58,825 Accounts receivable 121,075 106,825 Inventories 110,540 96,483 Prepaid expenses 3,229 7,216 Accounts payable (merchandise creditors) 45,517 60,398 What is the amount of cash...

The net income reported on the income statement for the current year was $318,700. Depreciation recorded...

The net income reported on the income statement for the current year was $258,880. Depreciation recorded...

The net income reported on the income statement for the current year was $258,880. Depreciation recorded on fixed assets and amortization of patents for the year were $37,299 and $9,059, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows: End Beginning Cash $53,792 $43,725 Accounts Receivable 120,269 104,586 Inventories 102,005 90,872 Prepaid Expenses 2,087 7,274 Accounts Payable (merchandise creditors) 53,041 72,688 What is the amount of cash...

Subjects