Mallory Michaels, senior accountant for Trendy Fashions, has gathered the follow

Question

Mallory Michaels, senior accountant for Trendy Fashions, has gathered the following balances from the company’s general ledger:

Using the indirect method, prepare the cash flows provided by operating activities section of the statement of cash flows for 2016. (Show amounts that decrease cash flow with either a - sign, e.g. -15,000 or in parentheses, e.g. (15,000).)

December 31, 2016 December 31, 2015 Accounts Receivable $49,487 $62,531 Inventories 144,830 118,706 Prepaid Expenses 4,500 3,820 Accounts Payable 40,078 48,398 Accrued Liabilities 14,190 11,405 Income Taxes Payable 1,490 11,675 Net Income 712,821 Depreciation Expense 84,098 Loss on the sale of land 15,500

Explanation / Answer

Cash flow from operating activities net income 712,821 Adjustments to net income depreciation expense 84,098 loss on the sale of land 15,500 decrease in account receivable 13044 increase in inventories -26124 increase in prepaid expense -680 Decrease in accounts payable -8320 increase in accrued liabilities 2785 decrease in income taxes payable -10185 Net cash flow from operating activities 782,939

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