3. The net income reported on an income statement for the current year was $63,0

Question

3. The net income reported on an income statement for the current year was $63,000. Depreciation recorded on fixed assets for the year was $24,000. Balances of the current asset and current liability accounts at the end and beginning of the year are listed below. Prepare the Cash Flows from Operating Activities section of the statement of cash flows using the indirect method. End Beginning Cash $65,000 $ 70,000 Accounts receivable (net) 70,000 57,000 Inventories 86,000 102,000 Prepaid expenses 4,000 4,500 Accounts payable (merchandise creditors) 51,000 58,000 Cash dividends payable 4,500 6,500 Salaries payable 6,000 7,500

Explanation / Answer

Cash Flow from Operating Activities Net Income 63000 Add: Depreciation 24000 Increase in Accounts Receivable -13000 Decrease in Inventories 16000 Decrease in prepaid expenses 500 Decrease in Accounts Payable -7000 Decrease in Salaries Payable -1500 Cash Flow from Operating Activities 82000

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