Fitzpatrick Company\'s calendar -year 2013 income statement shows the following:

Question

Fitzpatrick Company's calendar -year 2013 income statement shows the following: Net Income, $374,000; Depreciation Expense, $44,000; Amortization Expense, $7,200; Gain on Sale of Plant Assets, $6,000. An examination of the company's current assets and current liabilities reveals the following changes (all from operating activities): Accounts Receivable decrease, $17,100; Merchandise Inventory decrease, $42,000; Prepaid Expenses increase, $4,700; Accounts Payable decrease, $8,200; Other Payables increase. $1, 200. Use the indirect method to compute cash flow from operating activities. (Amounts to be deducted should be indicated with a minus sign.) Cash flows from operating activities: Adjustments to reconcile net income to net cash provided by operating activities

Explanation / Answer

Cash Flows from Operating Activities Amount Net Profit Before Tax & Extra Ordinary Item 374000 Adjustments for: Depreciation Expenses 44000 Amortzation Expense 7200 Gain on sale of Plant Assets -6000 Operating Profit before working capital changes 419200 Adjustments for Current Assets & Current Liabilties Decrease in Accounts Receivable 17100 Decrease in Merchandise Inventory 42000 Increase in Prepaid Expense -4700 Decrease in Accounts Payable -8200 Increase in Other Payables 1200 Cash Genearted from Operations 466600

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