Question

44.The net income reported on the income statement for the current year was $307,371. Depreciation recorded on fixed assets and amortization of patents for the year were $33,146, and $9,120, 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	$39,691	$68,467
Accounts receivable	102,966	120,202
Inventories	81,162	104,718
Prepaid expenses	8,275	4,037
Accounts payable (merchandise creditors)	73,153	52,791

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

Select the correct answer.

$331,357

$406,553

$390,429

$329,815

Answer 1

• All working forms part of the answer
• The correct answer is Option 2^nd: $ 406,553
• The whole working for above answer is given below:

Net Income		$                           3,07,371.00
Adjustments:
Depreciation expense	$                        33,146.00
Amortisation expense	$                          9,120.00	$                               42,266.00
Changes in Working capital:
Decrease in Accounts receivables	$                        17,236.00
Decrease in Inventories	$                        23,556.00
Increase in Prepaid Expenses	$                        (4,238.00)
Increase in Accounts Payable	$                        20,362.00	$                               56,916.00
Cash Flows from Operating Activities		$                           4,06,553.00