Question

Calculator The net income reported on the income statement for the current year was $294,553. Depreciation recorded on fixed assets and amortization of patents for the year were $38,575 and $11,568, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows: End Beginning Cash $53,450 $39,975 Accounts Receivable 127,345 103,052 Inventories 109,309 83,765 Prepaid Expenses 4,646 8,151 Accounts Payable (merchandise creditors) 45,865 70,203 What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the indirect method

Answer 1

Answer:

$274,026

Explanation:

Prepare a cash flows from operating activities as follows ;

Cash Flow from Operating Activities

Net Income for the year                                                   $294,553

Adjustment for Non-Cash items :

Depreciation                                                                       $38,575

Amortization of patents                                                       $11,568

Adjustments for Changes in Working Capital items:

Increase in Accounts Receivable                                    ($24,293)

Increase in Inventory                                                        ($25,544)

Decrease in Prepaid expenses                                          $3,505

Decrease in Accounts Payable                                        ($24,338)

Net Cash from Operating Activities                                $274,026

Conclusion

Therefore the amount of cash flows from operating activities is $274,026