During the year, Hepworth Company earned a net income of $59,225 Beginning and ending balances for the year for selected accounts are as follows Account Beginning Ending Cash $108,000 $125,600 Accounts receivable 66,600 99,150 Inventory 36,800 52,500 Prepaid expenses 27,200 29,400 Accumulated depreciation 81,900 92,500 Accounts payable 45,300 54,425 Wages payable 26,000 15,100 There were no financing or investing activities for the year The above balances reflect all of the adjustments needed to adjust net income to operating cash flows Required 1 Prepare a schedule of operating cash flows using the indirect method 2 Suppose that all the data used in Requirement 1 except the ending accounts payable and cash balances are not known Assume also that you know that the operating cash flow for the year was $20,075 What is the ending balance of accounts payable 3 Conceptual Connection Hepworth has an opportunity to buy some equipment that will significantly increase productivity The equipment costs $25,000 Assuming exactly the same data used for Requirement 1, can Hepworth buy the equipment using this years operating cash flows X Amount Descriptions Refer to the list below for the exact wording of an amount description within your Statement of Cash Flows Amount Descriptions Decrease in accounts payable Decrease in accounts receivable Decrease in inventory Decrease in wages payable Depreciation expense Increase in accounts payable Increase in accounts receivable Increase in inventory Increase in wages payable Net cash from operating activities Net income Net loss X Operating Cash Flows Indirect Method 1 Prepare a schedule of operating cash flows using the indirect method (Note Use a minus sign to indicate any decreases in cash or cash outflows Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries ) Hepworth Company Schedule of Operating Cash Flows 1 Cash flows from operating activities 2 3 Add (deduct) adjusting items 4 5 6 7 8 9 10 Final questions 2 Suppose that all the data used in Requirement 1 except the ending accounts payable and cash balances are not known Assume also that you know that the operating cash flow for the year was $20,075 What is the ending balance of accounts payable 3 Conceptual Connection Hepworth has an opportunity to buy some equipment that will significantly increase productivity The equipment costs $25,000 Assuming exactly the same data used for Requirement 1, can Hepworth buy the equipment using this years operating cash flows

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During the year, Hepworth Company earned a net income of $59,225. Beginning and ending balances for the year for selected accounts are as follows: Account

During the year, Hepworth Company earned a net income of $59,225. Beginning and ending balances for the year for selected accounts are as follows:

	Account
	Beginning	Ending
Cash	$108,000	$125,600
Accounts receivable	66,600	99,150
Inventory	36,800	52,500
Prepaid expenses	27,200	29,400
Accumulated depreciation	81,900	92,500
Accounts payable	45,300	54,425
Wages payable	26,000	15,100

There were no financing or investing activities for the year. The above balances reflect all of the adjustments needed to adjust net income to operating cash flows.

Required:

1.	Prepare a schedule of operating cash flows using the indirect method.
2.	Suppose that all the data used in Requirement 1 except the ending accounts payable and cash balances are not known. Assume also that you know that the operating cash flow for the year was $20,075. What is the ending balance of accounts payable?
3.	Conceptual Connection: Hepworth has an opportunity to buy some equipment that will significantly increase productivity. The equipment costs $25,000. Assuming exactly the same data used for Requirement 1, can Hepworth buy the equipment using this years operating cash flows?

Amount Descriptions

Refer to the list below for the exact wording of an amount description within your Statement of Cash Flows.

Amount Descriptions
Decrease in accounts payable
Decrease in accounts receivable
Decrease in inventory
Decrease in wages payable
Depreciation expense
Increase in accounts payable
Increase in accounts receivable
Increase in inventory
Increase in wages payable
Net cash from operating activities
Net income
Net loss

Operating Cash Flows - Indirect Method

1. Prepare a schedule of operating cash flows using the indirect method. (Note: Use a minus sign to indicate any decreases in cash or cash outflows. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.)

Hepworth Company

Schedule of Operating Cash Flows

1	Cash flows from operating activities:
2
3	Add (deduct) adjusting items:
4
5
6
7
8
9
10

Final questions

2. Suppose that all the data used in Requirement 1 except the ending accounts payable and cash balances are not known. Assume also that you know that the operating cash flow for the year was $20,075. What is the ending balance of accounts payable?

3. Conceptual Connection: Hepworth has an opportunity to buy some equipment that will significantly increase productivity. The equipment costs $25,000. Assuming exactly the same data used for Requirement 1, can Hepworth buy the equipment using this years operating cash flows?