Question

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 Cash Flows from Operating Activities section of the statement of cash flows, using the indirect 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: Net income $ Adjustments to reconcile net income to net cash flow from operating activities: Depreciation Changes in current operating assets and liabilities: Decrease in accounts receivable Increase in inventories Decrease in prepaid expenses Decrease in accounts payable Increase in salaries payable Net cash flow from operating activities $

Answer 1

Cash Flow Statement (Partial)
A. Cash Flows from Operating Activity
Net Income		$    313,900.00
Adjustments to reconcile net income to net cash flows from operating activities
Depreciation expense	$      93,900.00
Change in Current operating Assets and Liabilities
Decrease in Accounts receivables	$        2,220.00
Decrease in Accounts Payable	$      (4,410.00)
Decrease in prepaid expense	$            730.00
Increase in salaries payable	$        1,210.00
Increase in Inventory	$    (21,510.00)
		$      72,140.00
Net cash flow from Operating activities		$    386,040.00