Cash Flows from Operating ActivitiesIndirect Method

The net income reported on the income statement for the current year was $244,600. Depreciation recorded on equipment and a building amounted to $73,100 for the year. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows:

	End of Year	Beginning of Year
Cash	$65,550		$68,170
Accounts receivable (net)	83,120		84,120
Inventories	163,880		144,930
Prepaid expenses	9,110		9,610
Accounts payable (merchandise creditors)	73,220		76,080
Salaries payable	10,550		9,480

Question Content Area

a. Prepare the "Cash Flows from 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.

Cash flows from operating activities:
Decrease in prepaid expensesDepreciationIncrease in inventoriesNet income	$- Select -
Adjustments to reconcile net income to net cash flow from operating activities:
Decrease in accounts payableDecrease in accounts receivableDepreciationIncrease in accounts receivable	- Select -
Changes in current operating assets and liabilities:
Decrease in accounts receivableDecrease in salaries payableDepreciationIncrease in accounts receivable	- Select -
Decrease in inventoriesIncrease in accounts receivableIncrease in inventoriesIncrease in prepaid expenses	- Select -
Decrease in prepaid expensesIncrease in accounts payableIncrease in accounts receivableIncrease in prepaid expenses	- Select -
Decrease in accounts payableDecrease in salaries payableDepreciationIncrease in accounts payable	- Select -
Decrease in salaries payableIncrease in accounts receivableIncrease in prepaid expensesIncrease in salaries payable	- Select -
Net cash flow from operating activities		$fill in the blank 4f5edf000fb2015_15

Question Content Area

b. If the direct method had been used, would the net cash flow from operating activities have been the same?

No/ Yes