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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 flows from operating activities reported on the statement of cash flows prepared by the indirect method?

a. $263,962

b. $248,970

c. $334,622

d. $278,422

Solutions

Expert Solution

Answer; a.$263,962

Explanation

Cash Flow from Operating Activities
$
Net Income        258,880.00
Adjustments for non cash effects:
Depreciation expense on fixed assets          37,299.00
Amortization of patents            9,059.00
Changes in operating assets and liabilities:
Increase in Accounts receivable         (15,683.00)
Increase in Inventory         (11,133.00)
Decrease in Prepaid Expenses            5,187.00
Decrease in Accounts Payable         (19,647.00)
Net Cash Flow from Operating Activities        263,962.00

ekkarill92 answered 3 years ago
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