( Frl Dec 15 3:24 PM assignmenld 698017 CengageNowv2 Online teaching and learnin
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( Frl Dec 15 3:24 PM assignmenld 698017 CengageNowv2 Online teaching and learning resource from Cengage Leaming 5. EX13-15 ALGO (Algorithmic) Determining Net Income from Net Cash Flow from Operating Activities Curwen Inc. reported net cash flow from operating activities or *183,700 an its statement or cash no s te the year ended December), me %oong s fo haben war epoto Operating Activities section of the statement of cash ows, using the indirect method: Decrease in income taxes payable Decrease in inventories 3,400 12,900 of investments Increase in accounts payable tncrease in prepaid expenses Increase in accounts receivable 6,300 a. Determine the net income reported by Curwen inc. for the year ended December 3 b. Curwen's net income is different than net cash flow from operating adtivities. which of the fotlowing could possbly be the reason for such dfference? a. Because depreciation expense which has no effect on cash flows from operating activities b. Changes in current operating assets and liabilities that are added or deducted e. Changes un fixed assets and liabites that are added or deducted. d. Gan from sales of r vestment is included in net inc while the sales proceeds are added operating activites of cash now statemets.Explanation / Answer
ans)
a) Computation of net income from Net cash flows from operating activities
Net cash from operating activities = 183700
Add: Decrease in income taxes payable = 3400
Less: Decrease in inventories = (8400)
Depreciation = (12900)
Add: Gain on sale of investments = 5800
Less: Increase in accounts payable = (2300)
Add: increase in prepaid expenses = 1400
Increase in accounts receivable = 6300
Net income 177000
b) option (B) changes in current operating assets and liabilities that are added or deducted
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