Question

Software Distributors reports net income of $111,000. Included in net income is a gain on the sale of land of $10,000. A comparison of this year’s and last year’s balance sheets reveals an increase in accounts receivable of $15,000, an increase in inventory of $18,000, and a decrease in accounts payable of $27,000.

Required:
Prepare the operating activities section of the statement of cash flows using the indirect method. Do you see a pattern in Software Distributors’ adjustments to net income to arrive at operating cash flows? What might this imply?



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  • CreatedJuly 15, 2014
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