The net income reported on the income statement for the current year was $310,000.

Depreciation recorded on fixed assets and amortization of patents for the year were

$40,000 and $9,000, respectively. Balances of current asset and current liability

accounts at the end and at the beginning of the year are as follows:

End Beginning

Cash $50,000 $60,000

Accounts receivable 112,000 108,000

Inventories 105,000 93,000

Prepaid expenses 4,500 6,500

Accounts payable (merchandise creditors) 75,000 89,000

What is the amount of cash flows from operating activities reported on the statement of cash

flows prepared by the indirect method?

a. $233,000

b. $289,000

c. $387,000

d. $331,000

2. Accounts receivable arising from trade transactions amounted to $62,000 and $78,000

at the beginning and end of the year, respectively. Net income reported on the income

statement for the year was $125,000. Exclusive of the effect of other adjustments, the

cash flows from operating activities to be reported on the statement of cash flows

prepared by the indirect method are:

a. $109,000

b. $141,000

c. $125,000

d. $140,000

3. From the following data for David ProElecticals, calculate the quick ratio.

Cash $ 68,500

Accounts receivable 130,000

Inventories 213,000

Prepaid expenses 25,000

Total current assets $436,500

Less current liabilities 275,000

Working capital $161,500

a. 1.6

b. 0.7

c. 0.3

d. 1.5