Question

The net income reported on the income statement for the current year was $265,758. Depreciation recorded...

The net income reported on the income statement for the current year was $265,758. Depreciation recorded on fixed assets and amortization of patents for the year were $42,093 and $9,968, 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 $42,105 $56,980
Accounts receivable 127,283 106,421
Inventories 112,613 91,073
Prepaid expenses 3,779 7,472
Accounts payable (merchandise creditors) 47,993 63,432

What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the indirect method?

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Answer #1

As is observable, the net change in current assets is $ 23834 and Change in Accounts Payable = 47993 - 63432 = - $ 15439

Net Income = $ 265758

Add: Depreciation = $ 42093 (non-cash expense)

Add: Amortization = $ 9968 (non-cash expense)

Less: Increase in Assets = Change in Current Assets = $ 23834

Less: Decrease in Liabilities = Change in Accounts Payable = $ 15439

Cash Flow from Operating Activities = $ 309424

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