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Statement of Cash Flow using indirect method

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Rapture Company's 2011 income statement and selected balance sheet data at December 31, 2010 and 2011, follow ($ thousands).

RAPTURE COMPANY
Income Statement
For Year Ended December 31, 2011
Sales revenue $ 64,000
Expenses
Cost of goods sold 19,000
Depreciation expense 5,000
Salaries expense 10,000
Rent expense 2,500
Insurance expense 1,500
Interest expense 1,700
Utilities expense 1,100

Net income $ 23,200

RAPTURE COMPANY
Selected Balance Sheet Accounts
At December 31 2011 2010
Accounts receivable $ 380 $ 391
Inventory 92 71
Accounts payable 118 126
Salaries payable 45 34
Utilities payable 11 8
Prepaid insurance 8 9
Prepaid rent 11 9

Required:
Prepare the cash flows from operating activities section only of the company's 2011 statement of cash flows using the indirect method (amounts to be deducted should be indicated with a minus sign).

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Solution Summary

The solution contains cash flow statement in excel sheet using indirect method. Effect of increase and decrease of current assets and current liabilities on net cash provided by operating activities is shown in classified form. Full explanatory notes provided for treatment of various items of balance sheet including treatment of depreciation being non-cash item of income statement.

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Statement of Cash Flows (Indirect Method) for Millco, Inc
Discuss how the different sections of the statement of cash flows assist different sets of users
merits of using the direct method versus the indirect method of preparation

1) Prepare statement of cash flows (indirect method) using balance sheet data. Presented below {see attached} are comparative balance sheets for Millco, Inc., at January 31 and February 28, 2004.

2) Write 350-500 words discussing how the different sections of the statement of cash flows assist different sets of users.

3) Also discuss the merits of using the direct method versus the indirect method of preparation

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