Blue Company’s net income last year was $35,000. Changes in selected balance sheet accounts for the year appear below: Increases (Decreases)

Blue Company’s net income last year was $35,000. Changes in selected balance sheet accounts for the year appear below: Increases (Decreases) Debit balances: Accounts receivable $(7,000) Inventory 8,000 Prepaid expenses (6,000) Credit balances: Accumulated depreciation 10,000 Accounts payable 13,000 Accrued liabilities (5,000) Taxes payable 5,000 Based solely on this information, net cash flow from operating activities under the indirect method on the statement of cash flows would be:

0 thoughts on “Blue Company’s net income last year was $35,000. Changes in selected balance sheet accounts for the year appear below: Increases (Decreases)”

  1. Answer:

    $63,000

    Explanation:

    The preparation of the Cash Flows from Operating Activities—Indirect Method is shown below:

    Cash flow from Operating activities – Indirect method

    Net income $35,000

    Adjustment made:

    Add : Depreciation expense $10,000

    Add: Decrease in accounts receivable $7,000

    Less: Increase in inventory -$8,000

    Add: Increase in accounts payable $13,000

    Less: Decrease in accrued liabilities – $5,000

    Add: Decrease in prepaid expenses $6,000

    Add: Increase in income tax payable $5,000

    Total of Adjustments $28,000

    Net Cash flow from Operating activities               $63,000

    Reply

Leave a Comment

58 − = fifty six