The net income reported on the income statement for the current year was $400,000. Depreciation recorded on
Question:
The net income reported on the income statement for the current year was $400,000. Depreciation recorded on store equipment for the year amounted to $16,000. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows
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 flow from operating activities is different than net income.
Cash Accounts receivable (net) Merchandise inventory Prepaid expenses Accounts payable (merchandise creditors) Wages payable End of Year $41,600 30,400 40,000 4,800 40,000 21,200 Beginning of Year 538,400 28,000 44,000 3,600 36,000 24,000
Step by Step Answer:
a b Cash flows from operating activities shows the cash in flow or out flow from a companys ...View the full answer
Financial and Managerial Accounting
ISBN: 978-1285866307
13th edition
Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac
Related Video
In order to determine the amount of cash created by operating operations, the indirect technique for preparing the statement of cash flows entails adjusting net income with changes in balance sheet.
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