Question

Determining Net Cash Flow from Operating Activities: Burch Company reported the following items in its balance sheet and income statement: increase in cash account, $20,000; increase in accounts receivable, $5,000; increase in inventory, $20,000; increase in accounts payable, $10,000; decrease in income taxes payable, $1,000; net income, $70,000; depreciation expense, $25,000. Required: Compute the net cash flows from operating activities using the indirect method.

Answer 1

			Cash Flow from Operating Activities
			Net Income	70,000
			Adjustments to reconcile net income to net cash provided by operations
			Depreciation expense	25,000
			Increase in accounts receivable	(5,000)
			Increase in inventory	(20,000)
			Increase in accounts payable	10,000
			Decrease in income taxes payable	(1,000)
			Net Cash Flow from Operating Activities:	79,000