ACC 113 Lecture Notes - Lecture 17: Accounts Payable, Cash Flow, Free Cash Flow
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19 Dec 2020
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The net income reported on the income statements for the currentyear was $400,000. Depreciation recorded on the store equipment forthe year amounted to $16,000. Balances of the current asset andcurrent liability accounts at the beginning and end of the year areas follows:
End of Year | Beginning of Year | ||
Cash | $89,600 | $96,000 | |
Accounts receivable (net) | 112,000 | 118,400 | |
Merchandise inventory | 224,000 | 200,000 | |
Prepaid expenses | 12,800 | 14,400 | |
Accounts payable (merchandisecreditors) | 96,000 | 104,000 | |
Wages payable | 16,000 | 13,600 |
a. Prepare the Cash Flows from Operating Activities section ofthe statement of cash flows, using the indirect method.
b. If the direct method had been used, would the net cash flowfrom operating activities have been the same? Explain.
Net cash flow from operating activities, $394,400