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Mohammed Corporation's comparative balance sheet for current assets and liabilities was as follows: Dec. 31, 20Y2 Dec. 31, 20Y1 Accounts receivable $24,700 $24,000 Inventory 78,700 79,400 Accounts payable 16,700 15,500 Dividends payable 21,000 20,000 Adjust net income of $89,000 for changes in operating assets and liabilities to arrive at net cash flow from operating activities.

Mohammed Corporation's comparative balance sheet for current assets and liabilities was as follows: Dec. 31, 20Y2 Dec. 31, 20Y1 Accounts receivable $24,700 $24,000 Inventory 78,700 79,400 Accounts payable 16,700 15,500 Dividends payable 21,000 20,000 Adjust net income of $89,000 for changes in operating assets and liabilities to arrive at net cash flow from operating activities.

Managerial Accounting: The Cornerstone of Business Decision-Making
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter15: Financial Statement Analysis
Section: Chapter Questions
Problem 50E: Juroe Company provided the following income statement for last year: Juroes balance sheet as of...
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I know in order to find changes in current operating assets using the indirect method you start with the net income and subtract the increase in liabilities which would be your accounts receivable and add your decrease in inventory and subtract your decrease in accounts payable in order to find the net income. However when I compute this it says I am incorrect. 

Mohammed Corporation's comparative balance sheet for current assets and liabilities was as follows: Dec. 31, 20Y2 Dec. 31, 20Y1 Accounts receivable $24,700 $24,000 Inventory 78,700 79,400 Accounts payable 16,700 15,500 Dividends payable 21,000 20,000 Adjust net income of $89,000 for changes in operating assets and liabilities to arrive at net cash flow from operating activities.
Transcribed Image Text:Mohammed Corporation's comparative balance sheet for current assets and liabilities was as follows: Dec. 31, 20Y2 Dec. 31, 20Y1 Accounts receivable $24,700 $24,000 Inventory 78,700 79,400 Accounts payable 16,700 15,500 Dividends payable 21,000 20,000 Adjust net income of $89,000 for changes in operating assets and liabilities to arrive at net cash flow from operating activities.
Expert Solution
Step 1

Cash flow from operating activity indicates cash inflow and outflow of business operations. It can be prepared using direct and indirect methods.

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