Question

The net income reported on the income statement for the current year was $254,387. Depreciation recorded...

The net income reported on the income statement for the current year was $254,387. Depreciation recorded on fixed assets and amortization of patents for the year were $34,926, and $10,830, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows: End Beginning Cash $44,618 $61,409 Accounts receivable 108,689 128,780 Inventories 83,836 108,567 Prepaid expenses 7,029 2,862 Accounts payable (merchandise creditors) 78,915 47,876 What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the indirect method? Select the correct answer.

A.$285,899

B. $344,965

C.$371,837

D.$269,577

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Answer #1

Particulars

Working

Amount

Net Income

$254,387

ADD : Depreciation

$34,926 + $ 10,830

$45,756

ADD : DECREASE IN CURRENT ASSETS – CASH

$61,409 - $44,618

$16,791

ADD : DECREASE IN CURRENT ASSETS – ACCOUNTS RECEIVABLES

$128,780 - $108,689

$20,091

ADD : DECREASE IN CURRENT ASSETS – INVENTORIES

$108,567 - $83,836

$24,731

ADD : INCREASE IN CURRENT LIABILITIES – ACCOUNTS PAYABLE

$78,915 - $47,876

$31,039

LESS : INCREASE IN CURRENT ASSETS – PREPAID EXPENSE

$7,029 - $2,862

-$4,167

CASH FLOW FROM OPERATING ACTIVITIES

$388,628
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