I will appreciate if someone can help me with the procediment to find this answe
ID: 2496657 • Letter: I
Question
I will appreciate if someone can help me with the procediment to find this answer
The net income reported on the income statement for the current year was $275,000. Depreciation recorded on fixed assets and amortization of patents for the year were $40,000 and $9,000, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows:
What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the indirect method?
$198,000
$352,000
$296,000 Correct Answer
$324,000
End Beginning Cash $50,000 $60,000 Accounts receivable 112,000 108,000 Inventories 105,000 93,000 Prepaid expenses 4,500 6,500 Accounts payable (merchandise creditors) 75,000 89,000Explanation / Answer
Cash flows from operating Activities
Net Income 275,000 Add: Depritiation 40,000 Amortisation 9,000 Decrease in prepaid Expenses 2,000 51,000 Less: Increase in Account Receivable 4,000 Increase in Inventory 12,000 Decrease in Account Payable 14,000 -30,000 Net Cash flow from operating Activity 296,000