2 Accounts receivable amounts to 215000 for the beginning of

2. Accounts receivable amounts to $215,000 for the beginning of the year and $245,000 for the end of the year. Income reported on the income statement for the year is $300,000. How much is the cash flow from operating activities on the cash flow statement using the indirect method?

Solution

Adjustment to reconcile Net Income to Cash flow from Operating activities :

  

CASH FLOW STATEMENT
Cash flow from Operating Activities:
Particulars	(Amount in $)
Net Income	3,00,000
Adjustment to reconcile Net Income to Cash flow from Operating activities :
Increase in Accounts Receivable ($245000 - $ 215000)	-30,000
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Net Cash flow from Operating Activities	2,70,000
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