Cash Flows from Operating Activities—Indirect MethodThe net income reported on the income statement for the current year was $251,100. Depreciation recorded on equipment and a building amounted to $75,100 for the year. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows: End of YearBeginning of YearCash$63,280 $66,440 Accounts receivable (net)80,240 81,990 Inventories158,200 141,250 Prepaid expenses8,800 9,370 Accounts payable (merchandise creditors)70,680 74,150 Salaries payable10,190 9,240 a. Prepare the "Cash Flows from Operating Activities" section of the statement of cash flows, using the indirect method. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments.

Cash flows from operating activities is an important section of cash flow statement which shows all…

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Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter15: Statement Of Cash Flows

Section: Chapter Questions

Problem 6E

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Cash Flows from Operating Activities—Indirect Method

The net income reported on the income statement for the current year was $251,100. Depreciation recorded on equipment and a building amounted to $75,100 for the year. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows:

	End of Year	Beginning of Year
Cash	$63,280		$66,440
Accounts receivable (net)	80,240		81,990
Inventories	158,200		141,250
Prepaid expenses	8,800		9,370
Accounts payable (merchandise creditors)	70,680		74,150
Salaries payable	10,190		9,240

a. Prepare the "Cash Flows from Operating Activities" section of the statement of cash flows, using the indirect method. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments.

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