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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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The income statement for Mendelin Corporation is as follows:

Chapter 14, Problem 54P, The income statement for Mendelin Corporation is as follows: Additional information is as follows:

 Additional information is as follows:

  1. a. Interest expense includes $1,800 of discount amortization.
  2. b. The prepaid insurance expense account decreased by $2,000 during the year.
  3. c. Wages payable decreased by $3,000 during the year.
  4. d. Accounts payable increased by $7,500. (This account is for purchase of merchandise only.)
  5. e. Accounts receivable increased by $10,000 (net of allowance for doubtful accounts).
  6. f. Inventory decreased by $16,000.

 Required:

Prepare a schedule of operating cash flows using the indirect method.

To determine

Construct a schedule showing the operating cash flows with the use of indirect method.

Explanation

Cash Flows from Operating Activities:

This category of a cash flow statement shows the operational and profit generating activities in a firm. The operating cash flows increase or decrease the current assets and current liabilities of a firm.

The schedule showing operating cash flows using indirect method is in the table below:

M Corporation
Schedule for Cash Flow from Operating Activities
For the year ending
ParticularsAmount ($)
Cash flows from operating activities: 
Net income17,500
Add/ Less: ...

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