(Calculate cash from operations using the indirect method, LO 1, 3, 4) Consider the following non-cash current operating account information of Yahk Ltd. (Yahk):

Yahk’s net income for 2005 was $72,000. In addition, Yahk reported an amortization expense of $20,000 and a loss on the sale of capital assets of $10,000.
Required:

a. Calculate cash from operations for Yahk using the indirect method and prepare the cash from operations section of Yahk’s cash flow statement.

b. Explain why cash from operations is different from net income in 2005.

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2005 2004 Accounts receivable $ 24,000 $ 19,000 2005 2004 Accounts payable $52,000 $47,000 Inventory Prepaids Total current operating assets 75,000 87,000 Wages payable 9,000 12,000 10,000 8,000 Taxes payable 16,000 10,000 Interest payable Total current 9,500 13,000 $109,000 $114,000 operating liabilities $86,500 $82,000