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Fh 16-3 Exercises and Problems Cash Flows from Operating Activities-Indirect Method The net income reported on the income statement for the current year was $145,400. Depreciation recorded on store equipment for the year amounted to $24,000. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows: Cash Accounts receivable (net) Merchandise inventory End of Year Beginning of Year $59,180 $54,450 42,430 40,240 57,940 61,260 6,510 5,170 55,450 51,510 30,300 33,650 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 Flow (partial) Cash flows from operating activities: Net ing $ 145,400 Adjustments to reconcile net income to net cash flow from operating activities: Ch 16-3 Exercises and Problems 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 $145,400 Adjustments to reconcile net income to net cash flow from operating activities: Depreciation 24,000 Changes in current operating assets and liabilities: Increase in accounts receivable 2,190 3,320 -1,340 Decrease in merchandise inventory Increase in prepaid expenses Increase in accounts payable ncrease in wages payable 3,940 3,350 Net cash flow from operating activities the b. Cash flows from operating activities differs from net income because it does not use of accounting. For example revenues are recorded on the income statement when Check My Work 2 more Check My Work uses remaining. Previous Next