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Cash Flows from Operating Activities-Indirect Method The net income reported on the income statement for the current year was $275,200. Depreciation recorded on equipment and
Cash Flows from Operating Activities-Indirect Method The net income reported on the income statement for the current year was $275,200. Depreciation recorded on equipment and a building amounted to $82,300 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 Beginning of Year Year Cash $79,000 Accounts receivable (net) $75,960 96,320 189,900 97,490 Inventories 167,950 Prepaid expenses 10,560 11,140 84,850 88,160 Accounts payable (merchandise creditors) Salaries payable 12,230 10,980 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. Statement of Cash Flows (partial) Cash flows from operating activities: Net income 275,200 82.300 Adjustments to reconcile net income to net cash flow from operating activities: Depreciation Changes in current operating assets and liabilities: Increase in accounts receivable Decrease in inventories Increase in prepaid expenses Increase in accounts payable Decrease in salaries payable Net cash flow from operating activities O b. If the direct method had been used, would the net cash flow from operating activities have been the same? No
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