Question

Chew Corporation prepares its statement of cash flows using the indirect method of reporting operating activities. Net income for the 2018 fiscal year was $1,250,000. Depreciation expense of $140,000 was included with operating expenses in the income statement. The following information describes the changes in current assets and liabilities other than cash:

Particulars	Amount$
Increase in accounts receivable	152,000
Decrease in inventories	108,000
Decrease in prepaid expenses	62,000
Decrease in salaries payable	30,000
Increase in income taxes payable	44,000

Calculate cash flows from operating activities for 2018

Answer 1

Statement of cash flows : The statement of cash flows reports all cash transactions that are responsible for cash inflows and outflows, and the result of these transactions is reported as the ending cash balance at the conclusion of the reporting period. The cash flow statement comprises changes in cash balance as a result of operating, investing, and financing operations.

Chew Corporation

Statement of Cash flows

For the year ended 2018

Particulars	Amount$	Amount$
Cash flows from operating activities
Net income		12,50,000
Adjustments for net cash expense
Depreciation expense	1,40,000
Changes in operating assets & Liabilities
Decrease in inventories	1,08,000
Decrease in prepaid expenses	62,000
Increase in income taxes payable	44,000
Increase in accounts receivable	(1,52,000)
Decrease in Salaries payable	(30,000)	1,72,000
Net cash from operating activities		1,422,000

Therefore,net cash from operating activities of chew corporation is $1,422,000