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Accounting: Cash Flow - Indirect Method

Please see the attached file for the fully formatted problems.

Please help me with Question 8 on steps to finding the solution.

8. Cash flow from operations activities-indirect method
An analysis of the 2001 financial statements of Gourmet Provisions reveals the following:
(a) Accounts payable to suppliers of merchandise decreased by $40,000 during 2001.
(b) Dividends of$120,000 were declared in November 2001, to be paid in Januazy 2002.
(c) Dividends of $105,000, declared in November 2000, were paid in Januaiy 2001.
(d) Inventory levels increased by $76,000 during 2001.
(e) Depreciation expense for 2001 amounted to $39,000.
(f) Land, which had a cost of $200,000, was sold in 2001 for $320,000 cash, resulting in a
gain of S 120,000.
(g) Net income for 2001 was $630,000.
Using only the above information, follow the indirect method to compute Gourmet Provisions' net cash flow from operating activities for 2001.

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Using indirect method, we can calculate the CFO from these information.

Starting from (g) NI = 630000
(a) minus decrease ...

Solution Summary

Cash flow is calculated based on the indirect method.

$2.19