Changes in Current Operating Assets and LiabilitiesIndirect

Changes in Current Operating Assets and Liabilities-Indirect Method Accounts receivable Inventory Accounts payable Dividends payable Adjust net income of $100,700 for changes in operating assets and liabilities to arrive at net cash flow from operating activities. Victor Corporation\'s comparative balance sheet for current assets and liabilities was as follows: Dec. 31, Year 2 $19,800 56,500 17,700 21,000 Dec. 31, Year 1 $19,200 57,200 16,000 22,000 121,700 X

Solution

Solution

Statement of cash flow-Indirect method

Cash from operating activities

Net income

100,700

Adjustments to reconcile

Increase in account receivable

(19,800- 19,200)

-600

Decrease in inventory (57,200 - 56500)

700

Decrease in Accounts payable (17,700 – 16,000)

-1300

Net cash from operating activities

99,500

Dividends’ paid is financing activity

Statement of cash flow-Indirect method
Cash from operating activities
Net income					100,700
Adjustments to reconcile
Increase in account receivable	(19,800- 19,200)		-600
Decrease in inventory (57,200 - 56500)			700
Decrease in Accounts payable (17,700 – 16,000)		-1300
Net cash from operating activities			99,500
Dividends’ paid is financing activity