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Operating activities section of the statement of cash flows

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Burtric Company's net income last year was $98,000. Changes in the company's balance sheet accounts for the year appear below:

Increases
(Decreases)
Debit balances:
Cash $ 24,000
Accounts receivable 15,000
Inventory (18,000)
Prepaid expenses ( 6,000)
Long-term investments 10,000
Plant and equipment 40,000

Credit balances:
Accumulated depreciation 32,000
Accounts payable (14,000)
Accrued liabilities 11,000
Taxes payable ( 8,000)
Bonds payable (40,000)
Deferred taxes 12,000
Common stock 10,000
Retained earnings 62,000

The company declared and paid cash dividends of $36,000 last year.

Required:

Construct in good form the operating activities section of the company's statement of cash flows for the year. (Use the indirect method.)

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Solution Summary

The solution explains how to prepare the operating activities section of the statement of cash flows using the indirect method

Solution Preview

Please see the attached file.

Burtric Inc
Statement of Cash Flow Indirect Method
Cash Flow from Operating Activity $
Net Income 98,000
Add Depreciation 32,000 Depreciation is a non cash item
Subtract Increase in Accounts Receivable (15,000) Increase in assets is a use of cash
Add : decrease in ...

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