Balances of the current asset and current liability accounts

Balances of the current asset and current liability accounts at the end of the this year and the prior year are listed below. Prepare the Cash Flow from Operating Activities section of a Statement of Cash Flows using the indirect method. Inc. (Dec.) Prior Year $240,000 250,000 22,500 This Year Cash Accounts Receivable (net) Prepaid Insurance Inventories Accounts Payable Cash Dividends Payable Taxes Payable 24,000 53,000 1,200 31,000 7,500 4,100 68,000 2,400 33,000 10,000 5,000 NET INCOME reported for the current year on the income statement was $27,000 DEPRECIATION recorded on fixed assets for the year was $18,000 Cash Flow From Operating Activities: 27,000 Net Income, per income statement Adjustments to reconcile Net Income to Net Cash from Operating Activities Changes in current operating assets and liabilities: NetCash Flow-From-OperatingActivities

Solution

Cash flow from operating activities :

Cash flow from operating activities
Net income per income statement		27000
Adjustment to reconcile net income to net cash from operating activities
Depreciation expense	18000
Increase account receivable	-1500
Decrease prepaid insurance	15000
Decrease inventory	1200
Decrease account payable	-2000
Decrease taxes payable	-900
		29800
Net cash flow from operating activities		56800