CHAPTER 22 HANDOUT STATEMENT OF CASH FLOWS-10 POINTS REQUIREMENT 1 | ANALYZING INDIRECT METHOD TRANSACTIONS Answer the following questions related to the Statement of Cash Flows using the indirect method. 1. Why is an increase in accounts receivable a subtraction when adjusting from net income to operating cash flow? 2. Why is a decrease in accounts payable a subtraction when adjusting from net income to operating cash flow? 3. Why is stock-based compensation an addition when adjusting from net income to operating cash flow? Analyze how each transaction below would impact a company's Statement of Cash Flows using the indirect method. Use parentheses to indicate negative adjustments or negative cash flows. If a section is not impacted, indicate "NE" for no effect. Every box should have an answer. Transaction 100,000 shares of $1 par value common stock were repurchased as treasury stock at a cost of $25 per share. Temporary differences between financial income and taxable income caused the deferred tax asset account to decrease $30,000. $100,000 was paid for taxes, there was no change to the Tax Payable account, and this was the company's only temporary. difference. $3M of investment revenue was eamed on a significant influence investment. A truck that original cost $42,000 was sold for $18,000. The truck had $30,000 of Accumulated Depreciation recorded as of the date of sale. Operating Investing Financing REQUIREMENT 2 CALCULATING NET CASH FROM OPERATING ACTIVITIES Wilson Corporation reported $85,000 in net income during 20Y3. Depreciation expense was $14,000. The following current assets and liabilities also changed during the year. Increase in A/R Decrease in Inventory Increase in Prepaid Rent Decrease in A/P Decrease in Income Taxes Payable $6,000 $5,000 $2,000 $7,000 $1,000 Net cash from operating activities is (Circle the correct answer.): A. $88,000 B. $92,000 C. $102,000 D. $114,000