Operating Cash Flows: Indirect Method

Blaylock Company has provided the following partial comparative balance sheets and the income statement for 2014.

Blaylock Company Comparative Balance Sheets At December 31, 2013 and 2014
	2013	2014
Current assets:
Accounts receivable	$346,000	$281,250
Inventories	125,000	150,000
Current liabilities:
Wages payable	$300,000	$237,500

Blaylock Company Income Statement For the Year Ended December 31, 2014
Revenues	$1,200,000
Gain on sale of equipment	50,000
Less: Cost of goods sold	(650,000)
Less: Depreciation expense	(125,000)
Less: Interest expense	(25,000)
Net income	$ 450,000

Required:

Compute operating cash flows using the indirect method. Use a minus sign to indicate any decreases in cash or cash outflows.

Blaylock Company
Cash Flows from Operating Activities
For the Year Ended December 31, 2014
Net income		$ Correct 5
Add (deduct) adjusting items:
Decrease in accounts payable Decrease in accounts receivable Decrease in interest expense Decrease in preferred stock Increase in cost of goods sold Correct 7		Correct 8
Decrease in bonds payable Decrease in interest expense Decrease in wages payable Increase in cost of goods sold Increase in revenues Correct 9		Correct 10
Decrease in bonds payable Decrease in interest expense Decrease in preferred stock Increase in cost of goods sold Increase in inventories Correct 11		Correct 12
Decrease in inventories Depreciation expense Increase in accounts receivable Increase in wages payable Interest expense Correct 13		Correct 14
Gain on sale of equipment Loss on sale of equipment Net income Net increase in cash Retained earnings Correct 15		Correct 16
Net cash from operating activities		$