Cash Flows from Operating ActivitiesIndirect Method The net income reported on the income statement for the current year was $299,100. Depreciation recorded on equipment and a building amounted to $89,400 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 $79,260 $83,220 Accounts receivable (net) 100,500 102,690 Inventories 198,150 176,930 Prepaid expenses 11,020 11,730 Accounts payable (merchandise creditors) 88,530 92,870 Salaries payable 12,760 11,570 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 299,100 Adjustments to reconcile net income to net cash flow from operating activities: Denreciation 11 510 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 299,100 Adjustments to reconcile net income to net cash flow from operating activities: Depreciation 11,510 Changes in current operating assets and liabilities: Decrease in accounts receivable -2,190 Increase in inventories 21,220 Decrease in prepaid expenses 710 Decrease in accounts payable -4,340 Increase in salaries payable 1,190 Net cash flow from operating activities b. If the direct method had been used, would the net cash flow from operating activities have been the same? Yes Reporting Land Acquisition for Cash and Mortgage Note on Statement of Cash Flows On the basis of the details of the following fixed asset account, indicate the items to be reported on the statement of cash flows: ACCOUNT Land ACCOUNT NO. Balance Date Item Debit Credit Debit Credit Jan. 1 Balance 222,500 Feb. 10 Purchased for cash 340,400 562,900 Nov. 20 Purchased with long-term mortgage note 455,900 1,018,800 Item Section of Statement of Cash Flows Added or Deducted Amount Purchase of land for cash Investing activities section Purchase of land by issuing long-term mortgage note Cash Flows from Operating ActivitiesIndirect Method The income statement disclosed the following items for the year: Depreciation expense $32,900 Gain on disposal of equipment 19,200 Net income 270,500 The changes in the current asset and liability accounts for the year are as follows: Increase (Decrease) Accounts receivable $5,130 Inventory (2,920) Prepaid insurance (1,090) Accounts payable (3,480) Income taxes payable 1,090 Dividends payable 770 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 out flows, 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 flow from operating activities: Ch pilities: Decrease in accounts receivable Depreciation Increase in accounts receivable Ne Loss on disposal b. V of equipment ities different than net income? Cash flows from operating activities is based on of accounting, whereas net income is computed using of accounting. Statement of Cash Flows (partial) Cash flows from operating activities: $ et cash flow from operating activities: Depreciation iabilities: Increase in income taxes payable Increase in inventories Net income Net cash flow from operating activities . Why is net cash flows from operating activities different than net income? of accounting, whereas net income is computed using Cash flows from operating activities is based on of accounting