Preparing a Schedule of Cash Flows from Operating. Activities: Indirect Method F

ID: 2486497 • Letter: P

Question

Preparing a Schedule of Cash Flows from Operating. Activities: Indirect Method For the year ended June 30, 2014, net income for Flake Corporation was 514,800. Depreciation expense was dollar 4,000. During the year, Accounts Receivable increased by dollar 8,800, Inventories increased by 514,000, Prepaid Rent decreased by dollar 2,800, Accounts Payable increased by 528,000, Salaries Payable increased by 52,000, and Income Taxes Payable decreased by dollar 1, 200. Use the indirect method to prepare a schedule of cash flows from operating activities. Use the minus sign to indicate cash outflows or a decrease in cash.

Explanation / Answer

For the Year Ending June 30, 2014

2013

Cash Flows from Operating Activities

Net Income

$ 14,800

Add Expenses Not Requiring Cash:

Depreciation

$ 4,000

Other Adjustments:

Subtract increase in Accounts Receivable

$ (8,800)

Add Increase in Salaries Payable

$ 2,000

Add Increase in Accounts Payable

$ 28,000

Subtract Increase in Inventory

$ (14,000)

Add decrease in Prepaid Rent

$ 2,800

Subtract Decrease in Income tax Payable

$ (1,200)

Net Cash from Operating Activities

$ 27,600