15.2 Nelson Company\'s net income last year was $18,000 and cash dividends decla

Question

15.2 Nelson Company's net income last year was $18,000 and cash dividends declared and paid to the company stockholders was $12,000. Changes in selected balance sheet accounts for the year appear below: Increases (Decreases) Debit Balances: Accounts receivable $(8,000) Inventory $(6,000) Prepaid Expenses $12,000 Credit Balances: Accumulated Depreciation $23,000 Accounts Payable:$(10,000) Accrued Liabilities: $7,000 Taxes Payable: $5,000 Bonds Payable: $40,000 Based solely on this information, the net cash flows from operating activities under the indirect method on the statement of cash flows would be a. $7,000 b. $30,000 c. $17,000 d. $29,000

Explanation / Answer

Given options are not correct. there may be one more option (I.e. $45000) *Calculation: PARTICULARS AMOUNT AMOUNT Net Income 18000 Add: Accumulated depreciation 23000 Operating profit bifore working capital change 41000 Add: Adjustment for Current Assets & Current Liabilities: Accounts receivable 8000 Inventory 6000 Prepaid Expenses -12000 Accounts Payable -10000 Accrued Liabilities 7000 Taxes Payable 5000 4000 NET CASH FLOW 45000

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