The net income reported on the income statement for the current year was $318,700. Depreciation recorded on equipment and a building amounted to $93,980 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	$90,370	$95,280
Accounts receivable (net)	111,660	118,570
Inventories	232,780	203,250
Prepaid expenses	12,000	15,310
Accounts payable (merchandise creditors)	96,420	104,940
Salaries payable	15,310	13,420

Required:

A.

Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Use the minus sign to indicate cash outflows, cash payments, decreases in cash and for any adjustments, if required.

B.

If the direct method had been used, would the net cash flow from operating activities have been the same?

Amount Descriptions

Amortization of intangible assets

Decrease in accounts payable

Decrease in accounts receivable

Decrease in inventories

Decrease in prepaid expenses

Decrease in salaries payable

Depreciation

Increase in accounts payable

Increase in accounts receivable

Increase in inventories

Increase in prepaid expenses

Increase in salaries payable

Net cash flow from operating activities

Net cash flow used for operating activities

Net income

Net loss

A. Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Use the minus sign to indicate cash outflows, cash payments, decreases in cash and for any adjustments, if required.

Score: 54/77

Statement of Cash Flows (partial)

1	Cash flows from operating activities:
2
3	Adjustments to reconcile net income to net cash flow from operating activities:
4
5	Changes in current operating assets and liabilities:
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8
9
10
11