The Dickinson Company reported net income of $155,000 for the current year. Depr
ID: 2381577 • Letter: T
Question
The Dickinson Company reported net income of $155,000 for the current year. Depreciation recorded on buildings and equipment amounted to $65,000 for the year. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows:
End of Year
Beginning of Year
Cash
$20,000
$15,000
Accounts receivable
19,000
32,000
Inventories
50,000
65,000
Accounts payable
12,000
18,000
Instructions
Prepare the cash flows from the operating activities section of the statement of cash flows using the indirect method.
End of Year
Beginning of Year
Cash
$20,000
$15,000
Accounts receivable
19,000
32,000
Inventories
50,000
65,000
Accounts payable
12,000
18,000
Explanation / Answer
Operating cashflows:
Net income: 155,000
Depreciation: 65,000
Decrease in accounts receivable: 13,000
Decrease in inventories: 15,000
Decrease in accounts payable: -6,000
Total cash generated from operating activities: 242,000
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