eBook Cash Flows from Operating Activities-Indirect Method The net income reported on the income statement for the current year was $116,100. Depreciation recorded on store equipment for the year amounted to $19,200. 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 $45,400 $41,770 32,550 30,870 44,450 46,990 4,990 3,970 42,540 39,510 23,240 25,810 Show Me How Cash Accounts receivable (net) Merchandise inventory Prepaid expenses Accounts payable (merchandise creditors). Wages payable 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 outflows, 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: 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 outflows, 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 0 0 00000 b. Cash flows from operating activities differs from net income because it does not use the are recorded on the income statement when of accounting. For example revenues Reporting Issuance and Retirement of Long-Term Debt On the basis of the details of the following bonds payable and related discount accounts, indicate the items to be reported in the Financing Activities section of the statement of cash flows, assuming no gain or loss on retiring the bonds: ACCOUNT Bonds Payable Date Jan. June 1 2 30 Jan. Date: ACCOUNT Discount on Bonds Payable 1 Item 2 June 30 Dec. 31 Balance Retire bonds Issue bonds i Item Balance Retire bonds Issue bonds. Amortize discount Debit 150,000 Debit 30,000 Credit 450,000 Credit 12,000 2,625 ACCOUNT NO. Debit Balance Credit 750,000 600,000 1,050,000 ACCOUNT NO. Debit 33,750 21,750 51,750 49,125 Balance Credit Date Jan. 1 2 June 30 Date ACCOUNT Discount on Bonds Payable Jan. 1 2 June 30 Dec. 31 Item Retire bonds Issue bonds Item Balance Retire bonds Issue bonds Check My Work Amortization of discount Item Balance Retire bonds Issue bonds Amortize discount Debit 150,000 Debit 30,000 Credit 450,000 Credit 12,000 2,625 Debit Debit Section of Statement of Cash Flows Credit ACCOUNT NO. 33,750 21,750 51,750 49,125 750,000 600,000 1,050,000 Balance Credit Added or Deducted. Amount = 8 Previous Next >