The accounting records of Westlake Industries provided the data below. Net incom

Question

The accounting records of Westlake Industries provided the data below.

Net income                                                                    $200,000

Depreciation expense                                                       15,000

Decrease in inventory                                                       12,000

Increase in accounts receivable                                         1,400

Increase in interest payable                                               1,600

Amortization of bond discount                                            3,000

Increase in accounts payable                                             7,000

Cash dividends paid                                                          20,000

Required:

Prepare a reconciliation of net income to net cash flows from operating activities.

Explanation / Answer

Answer:-

Westlake Industries Particulars Amount Reconilation of net income to cash flow form opreating activities $ Net Income 200000 Adjustment for non cash effects Amortization of discount on bonds 3000 Depreciation 15000 Change in opreating assets & liabilities Increase in Accounts Receiviable -1400 Decrease in Inventory 12000 Increase in Accounts payable 1600 Increase in Interest payable 7000 Net cash flow from opreating activities 237200

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