Question

Accounts receivable from sales transactions were $45,427 at the beginning of the year and $61,370 at the end of the year. Net income reported on the income statement for the year was $124,042.
Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows prepared by the indirect method would be ____.

Answer 1

Answer:

The cash flows from operating activities to be reported on the statement of cash flows prepared by the indirect method would be $108,099

Explanation:

Cash Flow from Operating Activities adjusts the Net Income for the Year with (1) Non-Cash Items, (2) Items Appearing Elsewhere (3) Changes in Working Capital.

From the given data Net Cash flow from Operating Activities is Determined as follows:

Cash flow from Operating Activities

Net income                                                              $124,042

Adjustment for Changes in Working Capital.

Increase In Trade Receivables (61,370-45,427)    ($15,943)

Net Cash flow from Operating Activities              $108,099