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Cash Flows from Operating Activities-Indirect 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 Activities-Indirect 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 Beginning Year of Year Cash 86,150 75,900 Accounts receivable (net) 84,550 90,000 186,200 Inventories 175,000 Prepaid expenses 3,600 4,500 Accounts payable 91,500 110,000 (merchandise creditors) 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 fiows from operating activities Net income 185,000.00 Adjustments to reconcile net income to net cash flow from operating activities: Depreciation 96,000.00 Changes in current operating assets and liabilities: Increase in accounts receivable x 900.00 x Increase in inventories Decrease in prepaid expenses v -11,200.00 18,500.00 x Increase in accounts payable x 3,200.00 x Decrease in salaries payable x 5,450.00 x 260,850.00 Net cash flow from operating activities
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