The Black Corporation has provided the following information: Required: Determin

Question

The Black Corporation has provided the following information:

Required:

Determine the cash flow from operating activities using the indirect method of cash flow statement presentation.

Net income $ 560,000 Increase in prepaid expenses    14,000 Amortization of discount on bonds payable 10,000 Decrease in accounts payable 20,000 Increase in inventory 21,000 Dividends declared 39,000 Dividends paid 36,000 Increase in accounts receivable 30,000 Increase in wages payable 16,000 Increase in deferred tax liability 41,000

Explanation / Answer

Answer:-

Cash flow from opreating activities using Indirect method Particulars Amount $ Net Income 560000 Adjustment for non cash effects Amortization of discount on bonds payable 10000 Change in opreating assets & liabilities Increase in Prepaid expense -14000 Increase in Accounts Receiviable -30000 Increase in Inventory -21000 Increase in Accounts payable -20000 Increase in Wages payable 16000 Increase in deferred tax liability -41000 Net cash flow from opreating activities 460000

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