Question

Changes in Current Operating Assets and Liabilities—Indirect Method

Blue Circle Corporation's comparative balance sheet for current assets and liabilities was as follows:

	Dec. 31, Year 2		Dec. 31, Year 1
Accounts receivable	$28,300		$24,000
Inventory	45,200		50,800
Accounts payable	21,900		25,800
Dividends payable	26,000		28,000

Adjust net income of $127,300 for changes in operating assets and liabilities to arrive at net cash flow from operating activities.

Answer 1

Blue Circle Corporation
Statement of Cash Flows - Indirect method (Partial)
For the Year ended December 31, Year 2
	$
Cash flows from operating activities
Net income	127,300.00
Changes in current operating assets and liabilities:
Increase in accounts receivable	(4,300.00)
Decrease in Inventory	5,600.00
Decrease in Accounts payable	(3,900.00)
Net Cash provided by Operating Activities	124,700.00
Note: The Changes in dividend payable impacts the cash paid for dividends,
which is disclosed under financing activities.