10 The net income reported on the income statement for the c

10. The net income reported on the income statement for the current year was S450,000. Depreciation recorded on fixed assets for the year was $80,000. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows: Cash Accounts receivable Inventories Supplies Accounts payable End $40,000 85,000 120,000 2,000 50,000 Beginning S65,000 95,000 100,000 3,000 75,000 What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the indirect method? a.

Solution

Statement of Cash Flow from operating activities Particulars Amount Total Amount Net Income            4,50,000.00 Add: Depreciation                80,000.00          5,30,000.00 Adjustments: Decrease in Accounts recievable (95000-85000) 10000.00 increase in inventory(120000-100000)             (20,000.00) Decrease in supplies (3000-2000)                  1,000.00 Decrease in Accounts payable (75000-50000)             (25,000.00) -34000.00 Cash flow from operating activities          4,96,000.00