please answer in your own words 83. The net income reported on the income statem

Question

please answer in your own words

83. The net income reported on the income statement for the current year was S275,000. Depreciation recorded on fixed assets and amortization of patents for the year were S40,000 and $9,000, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows: Beginning 50,000 60,000 Accounts receivable 112.000 108,000 Inventories 105,000 93,000 Prepaid expenses 4,500 6,500 75.000 89.000 Accounts payable (merchandise creditors What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the indirect method? A $198,000 B. S324,000 C. S352,000 D. $296,000

Explanation / Answer

Answer is D => $296,000

Calculation of Cash Flows from Operating Activities (Indirect Method) Net Income $ 275,000.00 Add: Depreciation and Amortization ($40,000 + $9,000) $    49,000.00 Less: Increase in Accounts Receivables $    (4,000.00) Less: Increase in Inventories $ (12,000.00) Add: Decrease in Prepaid Expenses $      2,000.00 Less: Decrease in Accounts Payable $ (14,000.00) Cash Flow from Operating Activities $ 296,000.00 (Answer)

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