eBook Show Me How Print Item Cash Flows from Operating Activities-Indirect Method The net income reported on the income statement for the current year was $135,900. Depreciation recorded on store equipment for the year amounted to $22,600. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows: Cash End of Year Beginning of Year $55,030 $50,630 Accounts receivable (net) 39,460 37,420 Inventories 53,870 56,960 Prepaid expenses 6,050 4,810 Accounts payable (merchandise creditors) 51,560 47,900 Wages payable 28,180 31,290 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: Net income Adjustments to reconcilie net income to net cash flow from operating activities: Depreciation Changes in current operating assets and liabilities: Increase in accounts receivable Decrease in inventories Increase in prepaid expenses Increase in accounts payable Decrease in wages payable Net cash flow from operating activities Feedback of accounting. For b. Cash flows from operating activities differs from net income because it does not use the accrual basis example revenues are recorded on the income statement when they are earned Cash Flows from Operating Activities--Indirect Method The net income reported on the income statement for the current year was $308,600. Depreciation recorded on equipment and a building amounted to $92,300 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 Year Beginning of Year Cash $77,150 $81,010 Accounts receivable (net) 97,830 99,970 Inventories 192,880 172,230 Prepaid expenses 10,720 11,420 Accounts payable (merchandise creditors) 86,180 90,410 Salaries payable 12,420 11,260 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: Net income Adjustments to reconcile net income to net cash flow from operating activities: Depreciation Changes in current operating assets and liabilities: Decrease in accounts receivable Increase in inventories Decrease in prepaid expenses Decrease in accounts payable Increase in salaries payable Net cash flow from operating activities 0 1 1001 Feedback Check My Work Compute the increases and decreases in the current asset/liability accounts over the period. What affect would these changes have on cash? Cash Flows from Operating Activities --Indirect Method The income statement disclosed the following items for the year: Depreciation expense $39,000 Gain on disposal of equipment 22,750 Net income 249,800 The changes in the current asset and liability accounts for the year are as follows: Increase (Decrease) Accounts receivable $6,070 Inventory (3,460) Prepaid insurance (1,300) Accounts payable (4,120) Income taxes payable 1,300 Dividends payable 910 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 flows from operating activities: Net income 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 Feedback eBook 1,150 Print from Cash Flows Preim Operating Activities-indirect Method Selected data (in thousands) derived from the income statement and balance sheet of National Beverage Corp. for a recent year are as follows Income statement data: Net Income 349,355 Gain on disposal of property Depreciation expense 11,580 Other items involving noncash expenses 1,390 Balance sheet data: Increase in accounts receivable 1,705 Decrease in inventory Increase in prepaid expenses Decrease in accounts payable Decrease in accrued and other current Kabites 1,035 970 560 760 a. Prepare the "Cash flows from operating activities section of the statement of cash flows, using the indirect method for National Beverage Corp. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments. Enter the amounts in thousands of dollars, as shown above. National Beverage Co. Cash Flows from Operating Activities (in thousands) Cash flows from (used for operating activities: Net income 49.155 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 Feedback