Question

Problem 13-10

The following are line items included in the 2018 statement of cash flows prepared by Uli’s Clothing Company:

Depreciation expense		$	5,220
Increase in accounts receivable			1,790
Increase in accounts payable			12,700
Increase in accrued salaries payable			3,800
Increase in inventories			11,500
Gain on disposal of long-term assets			100
Increase in income taxes payable			2,060
Net income			15,700

Prepare the operating cash flow section of Uli’s statement of cash flows using the indirect method. (Enter amounts that decrease cash flow either with a negative sign preceding the number, e.g. -15,000 or parenthesis e.g. (15,000).)

Uli’s Clothing Company Partial Statement of Cash flows – Indirect method December 31, 2018For the Month Ended December 31, 2018For the Year Ended December 31, 2018
Operating activities
Decrease in accounts payableIncrease in accrued salaries payableAdjustment of net income to cash basisDepreciation expenseGain on disposal of long-term assetsDecrease in accrued salaries payableLoss on disposal of long-term assetsIncrease in income taxes payableDecrease in accounts receivableDecrease in income taxes payableIncrease in accounts receivableIncrease in accounts payableNet cash provided by operating activitiesIncrease in inventoriesNet IncomeNet cash used in operating activitiesDecrease in inventories		$
Decrease in accrued salaries payableDecrease in inventoriesDecrease in income taxes payableIncrease in accrued salaries payableIncrease in accounts payableIncrease in accounts receivableIncrease in income taxes payableAdjustment of net income to cash basisLoss on disposal of long-term assetsNet cash used in operating activitiesNet cash provided by operating activitiesNet IncomeDepreciation expenseGain on disposal of long-term assetsDecrease in accounts receivableDecrease in accounts payableIncrease in inventories :
Decrease in accrued salaries payable    Increase in income taxes payable    Depreciation expense    Net Income    Loss on disposal of long-term assets    Increase in inventories    Increase in accrued salaries payable    Increase in accounts receivable    Decrease in inventories    Net cash used in operating activities    Net cash provided by operating activities    Increase in accounts payable    Decrease in accounts payable    Decrease in accounts receivable    Decrease in income taxes payable    Adjustment of net income to cash basis    Gain on disposal of long-term assets
Net Income    Increase in accounts payable    Increase in accrued salaries payable    Net cash provided by operating activities    Decrease in income taxes payable    Increase in inventories    Adjustment of net income to cash basis    Increase in accounts receivable    Loss on disposal of long-term assets    Gain on disposal of long-term assets    Net cash used in operating activities    Depreciation expense    Decrease in accounts payable    Decrease in accounts receivable    Decrease in accrued salaries payable    Decrease in inventories    Increase in income taxes payable
Increase in income taxes payable    Loss on disposal of long-term assets    Increase in accounts receivable    Increase in accrued salaries payable    Decrease in accounts receivable    Net cash used in operating activities    Decrease in accrued salaries payable    Net cash provided by operating activities    Gain on disposal of long-term assets    Decrease in accounts payable    Increase in inventories    Decrease in inventories    Increase in accounts payable    Decrease in income taxes payable    Adjustment of net income to cash basis    Net Income    Depreciation expense
Net cash used in operating activities    Loss on disposal of long-term assets    Net Income    Adjustment of net income to cash basis    Decrease in income taxes payable    Net cash provided by operating activities    Increase in inventories    Decrease in inventories    Increase in accounts payable    Decrease in accounts payable    Depreciation expense    Gain on disposal of long-term assets    Increase in accrued salaries payable    Decrease in accrued salaries payable    Decrease in accounts receivable    Increase in accounts receivable    Increase in income taxes payable
Depreciation expense    Loss on disposal of long-term assets    Net Income    Increase in accounts payable    Increase in income taxes payable    Decrease in income taxes payable    Net cash used in operating activities    Increase in accounts receivable    Increase in accrued salaries payable    Gain on disposal of long-term assets    Decrease in accrued salaries payable    Decrease in accounts receivable    Increase in inventories    Decrease in accounts payable    Net cash provided by operating activities    Adjustment of net income to cash basis    Decrease in inventories
Increase in accounts payable    Gain on disposal of long-term assets    Decrease in accrued salaries payable    Increase in accrued salaries payable    Increase in inventories    Loss on disposal of long-term assets    Increase in income taxes payable    Adjustment of net income to cash basis    Decrease in inventories    Decrease in accounts receivable    Decrease in accounts payable    Increase in accounts receivable    Depreciation expense    Decrease in income taxes payable    Net cash provided by operating activities    Net cash used in operating activities    Net Income
Gain on disposal of long-term assets    Loss on disposal of long-term assets    Decrease in accounts receivable    Increase in accrued salaries payable    Increase in inventories    Increase in accounts payable    Decrease in accounts payable    Net Income    Decrease in accrued salaries payable    Depreciation expense    Adjustment of net income to cash basis    Decrease in inventories    Decrease in income taxes payable    Increase in income taxes payable    Net cash provided by operating activities    Net cash used in operating activities    Increase in accounts receivable
Increase in accounts payable    Adjustment of net income to cash basis    Decrease in accounts payable    Gain on disposal of long-term assets    Decrease in accounts receivable    Increase in inventories    Loss on disposal of long-term assets    Decrease in accrued salaries payable    Depreciation expense    Increase in accrued salaries payable    Increase in accounts receivable    Net cash provided by operating activities    Increase in income taxes payable    Net cash used in operating activities    Decrease in inventories    Decrease in income taxes payable    Net Income		$

Answer 1

Solution

Uli’s Clothing Company
Partial Statement of Cash flows – Indirect method
For the Year Ended December 31, 2018
Cash Flow from Operating Activities:
Net Income	$        15,700.00
Adjustment of net income to cash basis
Depreciation expense	$          5,220.00
Gain on disposal of long-term assets	$           (100.00)
Increase in Accounts receivable	$        (1,790.00)
Increase in accounts payable	$        12,700.00
Increase in accrued salaries payable	$          3,800.00
Increase in inventories	$     (11,500.00)
Increase in income taxes payable	$          2,060.00
Net Cash Provided by Operating Activities	$        26,090.00