Question

In: Accounting

Cemptex Corporation prepares its statement of cash flows using the indirect method to report operating activities.

Cemptex Corporation prepares its statement of cash flows using the indirect method to report operating activities. Net income for the 2021 fiscal year was $624,000. Depreciation and amortization expense of $87,000 was included with operating expenses in the income statement. The following information describes the changes in current assets and liabilities other than cash:

Decrease in accounts receivable
 ...........$22,000
Increase in inventory ..................................9,200
Increase prepaid expenses ........................8,500
Increase in salaries payable ....................10,000
Decrease in income taxes payable ........14,000

 

Required:
Prepare the operating activities section of the 2021 statement of cash flows.

 

Solutions

Expert Solution

Cash flows from operating activities:

          Net income                                                              $624,000

          Adjustments for noncash effects:

           Depreciation and amortization expense               87,000

          Changes in operating assets and liabilities:

           Decrease in accounts receivable                            22,000

           Increase in inventory                                                (9,200)

           Increase in prepaid expenses                                 (8,500)

           Increase in salaries payable                                   10,000

           Decrease in income taxes payable                      (14,000) 

 Net cash flows from operating activities                    $711,300


Net cash flows from operating activities                    $711,300

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