In: Accounting
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
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 |