Question

The net income reported on the income statement for the current year was $139,400. Depreciation recorded on store equipment for the year amounted to $23,000. 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	$56,740	$51,630
Accounts Recievable (net)	40,680	38,150
Merchandise inventory	55,550	58,080
Prepaid expenses	6,240	4,900
Accounts Payable (merchandise creditors)	53,170	48,840
Wages payable	29,050	31,910

Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments.

	Statement of cash flows (partial)
Cash flows from operating activities
Adjustments to reconcile net income to net cash flow from operating activities
Changes in current operating assets and liabilities
Net cash flow from operating activities

Answer 1

Solution

Cash flows from operating activities
Net Income	$      139,400.00
Adjustments to reconcile net income to net cash flow from operating activities
Depreciation	$       23,000.00
Changes in current operating assets and liabilities
Increase in accounts receivables	$        (2,530.00)
Decrease in Inventory	$         2,530.00
Increase in prepaid expense	$        (1,340.00)
Increase in accounts payable	$         4,330.00
Decrease in wages payable	$        (2,860.00)
Net cash flow from operating activities	$      162,530.00