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Preparing a Cash Flow Statement Nikea Inc.’s income statement for the year 2013 is shown below:...

Preparing a Cash Flow Statement Nikea Inc.’s income statement for the year 2013 is shown below: During the year, the balances for the sales account, cost of goods sold, and gross profit increased. This information is provided to you. Prepare the cash flow for operating activities, using both the direct method and the indirect method. Nikea’s income statement for the year 2013 is shown below. Accounts Amount ($) Sales 600,000 Cost of Goods Sold (400,000) Gross Profit 200,000 Operating Expenses (30,000) Deprecation (20,000) Net Income 150,000

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NIKEA INC

Direct method

Cash flow statement for the year 2013

Cash collected from customers $600,000
Cash paid to acquire inventory (400,000)
Cash paid to oprating expenses (30,000)
Cash generated from operating activities $170,000

NIKEA INC

Indirect method

cash flow statement for the year 2013

NET INCOME $150,000
ADD non operating expenses
Depreciation $20,000
Cash generated from operating activities $170,000

Here indirect method of cash flow statement begin with the net income  

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