Cash flows using the indirect method
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The net income reported on an income statement for the current year was $65,000. Depreciation recorded on fixed assets for the year was $25,000. Balances of the current asset and current liability accounts at the end and beginning of the year are listed below. Prepare the cash flows from operating activities section of a statement of cash flows using the indirect method.
End Beginning
Cash $50,000 $ 55,000
Accounts receivable (net) 60,000 47,000
Inventories 76,000 92,000
Prepaid expenses 4,000 4,500
Accounts payable
(merchandise creditors) 61,000 68,000
Cash dividends payable 4,500 6,500
Salaries payable 7,000 8,500
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Solution Summary
This solution creates cash flows given operating activities section from a statement.
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The net income reported on an income statement for the current year was $65,000. Depreciation recorded on fixed assets for the year was $25,000. ...
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