Cash Flow from Operating Activities (Indirect Method)

The Washington Company owns no plant assets and had the following income statement for the year:

Sales revenue		$900,000
Cost of goods sold	$470,000
Wages expense	120,000
Rent expense	50,000
Insurance expense	15,000	655,000
Net income		$245,000

Additional information about the company includes:

	End of Year	Beginning of Year
Accounts receivable	$54,000	$51,000
Inventory	60,000	76,000
Prepaid insurance	8,000	7,000
Accounts payable	24,000	18,000
Wages payable	7,000	11,000

Use the preceding information to calculate the cash flow from operating activities using the indirect method.

Use negative signs with cash outflow answers.

Cash Flow from Operating Activities
	Net Income		Answer
	Add (deduct) items to convert net income to cash basis
	Accounts Receivable	AnswerIncreaseDecrease	Answer
	Inventory	AnswerIncreaseDecrease	Answer
	Prepaid Insurance	AnswerIncreaseDecrease	Answer
	Accounts Payable	AnswerIncreaseDecrease	Answer
	Wages Payable	AnswerIncreaseDecrease	Answer
	Cash Provided by Operating Activities		Answer