Answer:
Cash flows from operating activities section
Amount in $
Net income 210,000.00
Depreciation 62,500.00
Change in Accounts Receivable -2,400.00
Change in Inventories 13,500.00
Change in Prepaid Expenses -600.00
Change in Accounts Payable 3,800.00
Change in Salaries Payable <u> -750.00</u>
Cash flows from operating activities <u> 286,050.00</u>
Explanation:
The operating activities includes net income, depreciation and changes in current assets and current liabilities. The depreciation as a non-cash item is added back in the cash flows statement.
An increase in current assets represents an outflow of cash hence the negative value and vice versa. The increase in current liabilities represents an inflow of cash hence it is positive and vice versa. Below are the changes.
Amount in $ Amount in $ D
ifference
Change in Accounts Receivable 71,000 73,400 (2,400.00)
Change in Inventories 140,000 126,500 13,500.00
Change in Prepaid Expenses 7,800 8,400 (600.00)
Change in Accounts Payable 62,600 66,400 3,800.00
Change in Salaries Payable 9,000 8,250 (750.00)
