Cash Flows from Operating ActivitiesIndirect Method

The net income reported on the income statement for the current year was $209,200. Depreciation recorded on equipment and a building amounted to $62,600 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	$54,810		$57,550
Accounts receivable (net)	69,500		71,020
Inventories	137,030		122,350
Prepaid expenses	7,620		8,110
Accounts payable (merchandise creditors)	61,220		64,230
Salaries payable	8,820		8,000

Question Content Area

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:
Decrease in prepaid expenses Depreciation Increase in inventories Net income	$_____
Adjustments to reconcile net income to net cash flow from operating activities:
Decrease in accounts payable Decrease in accounts receivable Depreciation Increase in accounts receivable	______
Changes in current operating assets and liabilities:
Decrease in accounts receivable Decrease in salaries payable Depreciation Increase in accounts receivable	______
Decrease in inventories Increase in accounts receivable Increase in inventories Increase in prepaid expenses	______
Decrease in prepaid expenses Increase in accounts payable Increase in accounts receivable Increase in prepaid expenses	______
Decrease in accounts payable Decrease in salaries payable Depreciation Increase in accounts payable	______
Decrease in salaries payable Increase in accounts receivable Increase in prepaid expenses Increase in salaries payable	______
Net cash flow from operating activities		$______

Question Content Area

b. If the direct method had been used, would the net cash flow from operating activities have been the same? (No, Yes)