Question
Determining Net Income from Net Cash Flow from Operating Activities Curwen Inc. reported net cash flows from operating activities of $151,800 on its statement of
Determining Net Income from Net Cash Flow from Operating Activities
Curwen Inc. reported net cash flows from operating activities of $151,800 on its statement of cash flows for a recent year ended December 31. The following information was reported in the Cash flows from (used for) operating activities section of the statement of cash flows, using the indirect method:
Decrease in income taxes payable | $2,900 |
Decrease in inventories | 7,200 |
Depreciation | 11,100 |
Gain on sale of investments | 5,000 |
Increase in accounts payable | 2,000 |
Increase in prepaid expenses | 1,200 |
Increase in accounts receivable | 5,400 |
a. Determine the net income reported by Curwen Inc. for the year ended December 31. $________
b. Curwens net income differed from cash flows from operations because of the following:
- Depreciation expense, which has no effect on net cash flows from operating activities.
- Gain on the sale of investments is reported in investing activities section of the cash flow statement.
- Changes in current operating assets and liabilities that are added or deducted, depending on their effect on cash flow but not in the income statement.
- Operating expenses are deducted from income but are added in the cash flow statement.
- Dividends are deducted from the investing activities in cash flow statement but are a charge against income in the income statement. ____________
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