Question

Larkspur Corporation had the following 2020 income statement.

Sales revenue		$220,000
Cost of goods sold		131,000
Gross profit		89,000
Operating expenses (includes depreciation of $23,000)		46,000
Net income		$43,000

The following accounts increased during 2020: Accounts Receivable $12,000, Inventory $12,000, Accounts Payable $12,000. Prepare the cash flows from operating activities section of Larkspur’s 2020 statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Larkspur Corporation Statement of Cash Flows-Indirect Method (Partial) choose the accounting period                                                          December 31, 2020For the Year Ended December 31, 2020For the Quarter Ended December 31, 2020
select an opening section name                                                          Cash at Beginning of PeriodCash at End of PeriodCash Flows from Financing ActivitiesCash Flows from Investing ActivitiesCash Flows from Operating ActivitiesNet Cash Provided by Financing ActivitiesNet Cash Provided by Investing ActivitiesNet Cash Provided by Operating ActivitiesNet Cash Used by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet Decrease in CashNet Increase in Cash
select an item                                                          Decrease in Accounts ReceivableDepreciation expenseNet IncomeDecrease in InventoryIncrease in Accounts ReceivableCash Payment for Operating ExpensesCash Payment to SuppliersCash Received from CustomersIncrease in Accounts PayableDecrease in Accounts PayableIncrease in Inventory		$enter a dollar amount
Adjustments to reconcile net income to
select an opening subsection name                                                          Cash at Beginning of PeriodCash at End of PeriodCash Flows from Financing ActivitiesCash Flows from Investing ActivitiesCash Flows from Operating ActivitiesNet Cash Provided by Financing ActivitiesNet Cash Provided by Investing ActivitiesNet Cash Provided by Operating ActivitiesNet Cash Used by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet Decrease in CashNet Increase in Cash
select an item                                                          Decrease in Accounts PayableIncrease in InventoryDecrease in Accounts ReceivableCash Received from CustomersDepreciation expenseIncrease in Accounts PayableIncrease in Accounts ReceivableCash Payment for Operating ExpensesDecrease in InventoryNet IncomeCash Payment to Suppliers	$enter a dollar amount
select an item                                                          Increase in InventoryCash Received from CustomersDecrease in Accounts PayableCash Payment to SuppliersNet IncomeDepreciation expenseDecrease in Accounts ReceivableCash Payment for Operating ExpensesIncrease in Accounts ReceivableDecrease in InventoryIncrease in Accounts Payable	enter a dollar amount
select an item                                                          Increase in InventoryDecrease in Accounts PayableCash Payment for Operating ExpensesDepreciation expenseCash Received from CustomersIncrease in Accounts ReceivableCash Payment to SuppliersDecrease in Accounts ReceivableNet IncomeDecrease in InventoryIncrease in Accounts Payable	enter a dollar amount
select an item                                                          Decrease in InventoryDecrease in Accounts PayableIncrease in Accounts ReceivableDecrease in Accounts ReceivableCash Payment to SuppliersNet IncomeCash Payment for Operating ExpensesIncrease in InventoryCash Received from CustomersIncrease in Accounts PayableDepreciation expense	enter a dollar amount
		enter a total amount of adjustments
select a closing section name                                                          Cash at Beginning of PeriodCash at End of PeriodCash Flows from Financing ActivitiesCash Flows from Investing ActivitiesCash Flows from Operating ActivitiesNet Cash Provided by Financing ActivitiesNet Cash Provided by Investing ActivitiesNet Cash Provided by Operating ActivitiesNet Cash Used by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet Decrease in CashNet Increase in Cash		$enter a total amount for this section

Answer 1

Ans:

Larkspur Corporation Statement of Cash Flows-Indirect Method

Net Income	43,000
Adjustment to reconcile net income to net cash flow provided by operating activities
Add: Depreciation	23,000
Less: Increase in Accounts Receivable	-12,000
Less: Increase in Inventory	-12,000
Add: Increase in Accounts payable	12,000
Cash Flow from Operating Activities	54,000

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