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Cash Flows from Operating ActivitiesIndirect Method The net income reported on the income statement for the current year was $185,000. Depreciation recorded on equipment and

Cash Flows from Operating ActivitiesIndirect Method

The net income reported on the income statement for the current year was $185,000. Depreciation recorded on equipment and a building amounted to $96,000 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 $75,000 $86,150
Accounts receivable (net) 84,550 90,000
Inventories 186,200 175,000
Prepaid expenses 3,600 4,500
Accounts payable (merchandise creditors) 91,500 110,000
Salaries payable 7,200 4,000

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:
Changes in current operating assets and liabilities:
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?

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