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Cash Flows from Operating Activities-Indirect MethodThe net income reported on the income statement for the current year was $153,600. Depreciation recorded on store equipment for the year amounted to $25,300.Balances of the current asset and current liability accounts at the beginning and end of the year are as follows:End of YearBeginning of YearCash$59,440$54,680Accounts receivable (net)42,62040,410Merchandise inventory58,19061,520Prepaid expenses6,5405,190Accounts payable (merchandise creditors)55,70051,730Wages payable33,79030,430a. Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method. Use the minus sign to indicate cash outflows,cash payments, decreases in cash, or any negative adjustments.Statement of Cash Flows (partial)Cash flows from operating activities:Adjustments to reconcile net income to net cash flow from operating activities:Changes in current operating assets and liabilities:Net cash flow from operating activities Statement of Cash Flows (partial)Cash flows from operating activities:Adjustments to reconcile net income to net cash flow from operating activities:Changes in current operating assets and liabilities:Net cash flow from operating activitiesb. Cash flows from operating activities differs from net income because it does not use theof accounting. For example revenues are recorded onthe income statement when

Question
Cash Flows from Operating Activities-Indirect Method
The net income reported on the income statement for the current year was $153,600. Depreciation recorded on store equipment for the year amounted to $25,300.
Balances of the current asset and current liability accounts at the beginning and end of the year are as follows:
End of Year
Beginning of Year
Cash
$59,440
$54,680
Accounts receivable (net)
42,620
40,410
Merchandise inventory
58,190
61,520
Prepaid expenses
6,540
5,190
Accounts payable (merchandise creditors)
55,700
51,730
Wages payable
33,790
30,430
a. Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method. Use the minus sign to indicate cash outflows,
cash payments, decreases in cash, or any negative adjustments.
Statement of Cash Flows (partial)
Cash flows from operating activities:
Adjustments to reconcile net income to net cash flow from operating activities:
Changes in current operating assets and liabilities:
Net cash flow from operating activities
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Cash Flows from Operating Activities-Indirect Method The net income reported on the income statement for the current year was $153,600. Depreciation recorded on store equipment for the year amounted to $25,300. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows: End of Year Beginning of Year Cash $59,440 $54,680 Accounts receivable (net) 42,620 40,410 Merchandise inventory 58,190 61,520 Prepaid expenses 6,540 5,190 Accounts payable (merchandise creditors) 55,700 51,730 Wages payable 33,790 30,430 a. Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments. Statement of Cash Flows (partial) Cash flows from operating activities: Adjustments to reconcile net income to net cash flow from operating activities: Changes in current operating assets and liabilities: Net cash flow from operating activities

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Statement of Cash Flows (partial)
Cash flows from operating activities:
Adjustments to reconcile net income to net cash flow from operating activities:
Changes in current operating assets and liabilities:
Net cash flow from operating activities
b. Cash flows from operating activities differs from net income because it does not use the
of accounting. For example revenues are recorded on
the income statement when
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Statement of Cash Flows (partial) Cash flows from operating activities: Adjustments to reconcile net income to net cash flow from operating activities: Changes in current operating assets and liabilities: Net cash flow from operating activities b. Cash flows from operating activities differs from net income because it does not use the of accounting. For example revenues are recorded on the income statement when

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Step 1

Definition of Cash flow from operating activities:

Cash Flow from operating activities refers to the company’s cash flow statement that explains the sources and uses of cash from ongoing regular business activities. In indirect method, it includes net income from Income Statement, adjustments to net income, and changes in working capital.

Step 2

a. Following is the Cash Flow Statement from ope...

Cash Flow Statement from operating activities
(Indirect method)
Particulars
Amount
Cash Flow from Operating activities:
Net Income
Adjustments to reconcile net income to net cash from operating activities:
Depreciation on store equipment
Changes in current operating assets and liabilities:
$1,53,600
-$25,300
-S2,210
$3,330
-$1,350
3,970
Increase in Account Receivable
Decrease in Merchandise Inventory
Increase in Prepaid Expenses
Increase in account Payable
Net Cash Flow from Operating Activities
S1,32,040
Answer: Cash Flow Statement from operating activities using indirect method is equal to
$132040
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Cash Flow Statement from operating activities (Indirect method) Particulars Amount Cash Flow from Operating activities: Net Income Adjustments to reconcile net income to net cash from operating activities: Depreciation on store equipment Changes in current operating assets and liabilities: $1,53,600 -$25,300 -S2,210 $3,330 -$1,350 3,970 Increase in Account Receivable Decrease in Merchandise Inventory Increase in Prepaid Expenses Increase in account Payable Net Cash Flow from Operating Activities S1,32,040 Answer: Cash Flow Statement from operating activities using indirect method is equal to $132040

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