16.4

Cash Flows from (Used for) Operating Activities The net income reported on the income statement for the current year was $152,000. Depreciation recorded on store equipment for the year amounted to $25,100. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows: End Beginning of Year of Year Cash $58,370 $53,700 Accounts receivable (net) 41,850 39,680 Merchandise inventory 57,140 60,410 Prepaid expenses 6,420 Accounts payable (merchandise creditors) $4,690 50,800 Wages payable 29,890 33,190 5,100 2. Prepare the Cash Flows from (used for) Operating Activities section of the statement of cash flows, using the Indirect method. Use the minus sign to indicate cash outflows, cash payments, decreases in cash or any negative adjustments. Statement of Cash Flows (partial) Cash flows from operating activities Adjustments to reconcile net income to net cash flows from (used for) operating activities: II DO Changes in current operating assets and liabilities: 6,420 Accounts payable (merchandise creditors) Wages payable 5,100 50,800 54,690 29,890 33,190 a. Prepare the Cash Flows from (used for) Operating Activities section of the statement of cash flows, using the Indirect method. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments. Statement of Cash Flows (partial) Cash flows from operating activities: Adjustments to reconcile net income to net cash flows from (used for) operating activities: Changes in current operating assets and liabilities: D001 Net cash flow from operating activities b. Cash flows from operating activities differ from net income because it does not use the the income statement when of accounting. For example revenues are recorded on