Exercise 16-3 Calculating cash flows from operating activities (indirect method) LO5

The account balances for the non-cash current assets and current liabilities of Kid-game Software Inc. are as follows:

	December 31
	2020			2019
Accounts receivable	$	131,000		$	110,100
Inventory		93,100			125,100
Prepaid expenses		55,200			50,600
Totals	$	279,300		$	285,800
Accounts payable	$	89,000		$	68,400
Salaries payable		26,700			38,900
Interest payable		50,600			41,700
Totals	$	166,300		$	149,000

During 2020, Kid-game Software Inc. reported depreciation expense of $61,000. All purchases and sales are on account. Profit for 2020 was $257,000.

Required: 1. Prepare the operating activities section of the statement of cash flows using the Indirect method. (List any deduction in cash and cash outflows as negative amounts.) 257,000 KID-GAME SOFTWARE INC. Statement of Cash Flows For Year Ended December 31, 2020 Cash flows from operating activities: Profit $ Adjustments to reconcile profit to net cash provided by operating activities: Depreciation expense Increase in accounts receivable Increase in accounts payable Increase in salaries payable Increase in prepaid expenses Increase in interest payable Decrease in merchandise inventory 61,000 Net cash inflow from operating activities $ 318,000