The income statement disclosed the following items for 2016: Depreciation expense ...........................$ 57,600 Gain on disposal of
Question:
The income statement disclosed the following items for 2016:
Depreciation expense ...........................$ 57,600
Gain on disposal of equipment ............... 33,600
Net income ............... . ............... 508,000
Balances of the current assets and current liability accounts changed between December 31, 2015, and December 31, 2016, as follows:
Increase
(Decrease)
Accounts receivable ....................$8,960
Inventory ............................. (5,120)
Prepaid insurance....................(1,920)
Accounts payable .................... (6,080)
Income taxes payable .................... 1,410
Dividends payable .................... 2,200
a. Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method.
b. Briefly explain why net cash flows from operating activities is different than net income.
Step by Step Answer:
Financial and Managerial Accounting
ISBN: 978-1285866307
13th edition
Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac