The net income reported on the income statement for the current year was $210,000. Depreciation recorded on equipment and a building amount to $62,500 for the year. Balances of the current asset and current liabilities accounts at the beginning and end of the year are as follows:
End of Year Beginning of Year
Cash $56,000 $59,500
Accounts receivable (net) 71,000 73,400
Inventories 140,000 126,500
Prepaid expenses 7,800 8,400
Accounts payable (merchandise creditors) 62,600 66,400
Salaries payable 9,000 8,250
Required:
(1) Prepare the Cash flows for Operating Activities section of the statement of cash flows, using the indirect method.
The net income reported on the income statement for the current year was $210,000. Depreciation recorded on equipment and a building amount to $62,500 for the year. Balances of the current asset and current liabilities accounts at the beginning and end of the year are as follows:
End of Year Beginning of Year
Cash $56,000 $59,500
Accounts receivable (net) 71,000 73,400
Inventories 140,000 126,500
Prepaid expenses 7,800 8,400
Accounts payable (merchandise creditors) 62,600 66,400
Salaries payable 9,000 8,250
Required:
(1) Prepare the Cash flows for Operating Activities section of the statement of cash flows, using the indirect method.
Related questions
The net income reported on the income statement for the currentyear was $364,000. Depreciation recorded on store equipment for theyear amounted to $14,500. Balances of the current asset and currentliability accounts at the beginning and end of the year are asfollows:
End of Year | Beginning of Year | |
|---|---|---|
| Cash | $43,210 | $38,400 |
| Accounts receivable (net) | 31,360 | 29,020 |
| Merchandise inventory | 39,590 | 45,160 |
| Prepaid expenses | 4,740 | 3,670 |
| Accounts payable (merchandise creditors) | 41,480 | 35,590 |
| Wages payable | 21,910 | 22,970 |
Required:
| A. | Prepare the Cash Flows from Operating Activities section of thestatement of cash flows, using the indirect method. Refer to theAmount Descriptions list provided for the exact wording of theanswer choices for text entries. Use the minus sign to indicatecash outflows, cash payments, decreases in cash and for anyadjustments, if required. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| B
|
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
