Opevous Page 4 of 11lll Next The net income reported on the income statement for

Question

Opevous Page 4 of 11lll Next The net income reported on the income statement for the current year was $295,000. Depreciation recorded on fixed assets and respectively. Balances of current asset and amontization of patents for the year were $40,000 and $5,000 current lability accounts at the end and at the beginning of the year are as follows Cash Accounts receivable Inventones Prepaid expenses End Beginning $50,000 $60.000 112.000 108,000 105,000 93,000 45006.500 75,000 89,000 Accounts payable (merchandse creditors) o a $302.000 b,$312.000 Oc $368,000 d $208,000 the web and

Explanation / Answer

B.$312,000.

the following is the calculation of cash flow from operating activities under indirect method:

2nd ques :

C.$190,000.

income tax paid = income tax for the year + opening payable - closing payable

=>$200,000 + 30,000 - 40,000

=>$190,000.

Net income $295,000 Add: depreciation $40,000 Add: amortization $5,000 less: increase in accounts receivable (112,000 - 108,000) ($4,000) less: increase in inventories (105,000 - 93,000) (12,000) add: decrease in prepaid expenses ($4,500 - 6,500) $2,000 less: decrease in accounts payable ($75,000 - $89,000) ($14,000) Cash flow from operating activities $312,000

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