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Prepare the cash flows from operating activities section of Mansfield's statement of cash flows using the indirect method.

Net income of Mansfield Company was $45,000. The accounting records reveal depreciation expense of $80,000 as well as increases in prepaid rent, salaries payable, and income taxes payable of $60,000, $15,000, and $12,000, respectively. Prepare the cash flows from operating activities section of Mansfield's statement of cash flows using the indirect method.

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Expert Solution

Cash Flows from Operating Activities:

Net income                                                            $45,000

Adjustments for noncash effects:

   Depreciation expense                                           80,000

Changes in operating assets and liabilities:

   Increase in prepaid rent                                      (60,000)

   Increase in salaries payable                                  15,000

   Increase in income taxes payable                        12,000                

Net cash inflows from operating activities       $92,000

Net cash inflows from operating activities:    $92,000

Renze Joy Candido answered 2 years ago
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