Reporting Net Cash Flow from Operating Activities
The income statement for Dunn Products Inc. is presented below.
The following balance sheet changes occurred during the year:
• Accounts receivable decreased by $85,150.
• Inventory decreased by $138,620.
• Prepaid expenses increased by $112,400.
• Accounts payable decreased by $67,225.
• Salaries payable increased by $18,300.
Required:
1. Prepare the net cash flows from operating activities using the indirect method.
2. CONCEPTUAL CONNECTION What are the causes of the major differences between net income and net cash flow from operating activities?
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