Answer and Explanation:
The preparation of the cash flow statements using the indirect method is shown below:
Cash flows from operating activities
Net Income $1,090
Adjustments made
Add: Depreciation expenses $210
Add: Decrease in Accounts receivable $810 ($860 - $1,670)
Less Decrease in Accounts Payable $-460 ($740 - $1,200)
Less: Decrease in salaries & wages payable -$210 ($540 - $750)
Net cash from operating activities 1,440
Cash flows from investing activities
Purchase of hockey equipment -$460
Net cash used investing activities -$460
Cash flows from financing activities
Borrowing from Long term notes payable $1,100
Net cash from financing activities $1,100
Net Increase in cash and cash equivalents $2,080
Add: Beginning cash balance $4,040
Ending Balance $6,120
The positive sign reflects the cash inflow and the negative sign indicates the cash outflow
