Cash Flows from Operating Activities—Indirect Method The net income reported on the income statement for the current year was $131,700. Depreciation recorded on store equipment for the year amounted to $21,700. 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 $51,230   $47,130   Accounts receivable (net) 36,730   34,830   Inventories 50,150   53,020   Prepaid expenses 5,640   4,480   Accounts payable (merchandise creditors) 48,000   44,580   Wages payable 26,230   29,130   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.

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Chapter1: Financial Statements And Business Decisions
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Cash Flows from Operating Activities—Indirect Method

The net income reported on the income statement for the current year was $131,700. Depreciation recorded on store equipment for the year amounted to $21,700. 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 $51,230   $47,130  
Accounts receivable (net) 36,730   34,830  
Inventories 50,150   53,020  
Prepaid expenses 5,640   4,480  
Accounts payable (merchandise creditors) 48,000   44,580  
Wages payable 26,230   29,130  

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.

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