Fortune Corporation’s comparative balance sheet for current assets and liabiliti
ID: 2490160 • Letter: F
Question
Fortune Corporation’s comparative balance sheet for current assets and liabilities was as follows
Dec. 31, 2010
Dec. 31, 2009
Accounts receivablE
7,500
5,200
Inventory
11,500
16,000
Accounts payable
4,300
5,200
Dividends payable
4,000
3,000
Net income was $65,000. Prepare the cash flows from operating activities section of the Statement of Cash Flows.
Dec. 31, 2010
Dec. 31, 2009
Accounts receivablE
7,500
5,200
Inventory
11,500
16,000
Accounts payable
4,300
5,200
Dividends payable
4,000
3,000
Explanation / Answer
Cash flow from operating activities ($) Net Income 65000 Adjustment : Add: Decrease in inventory (16000-11500) 4500 Add: Increase in dividend payable (4000-3000) 1000 Less: Increase in acounts receivable (7500-5200) -2300 Less: decrease in accounts payable (5200-4300) -900 2300 Net cash flow from operating activities 67300