Answered

Westonci.ca is the Q&A platform that connects you with experts who provide accurate and detailed answers. Explore our Q&A platform to find reliable answers from a wide range of experts in different fields. Get precise and detailed answers to your questions from a knowledgeable community of experts on our Q&A platform.

Accounts receivable decreased $350,000 during the year. 2. Prepaid expenses increased $160,000 during the year. 3. Accounts payable to suppliers of merchandise decreased $300,000 during the year. 4. Accrued expenses payable decreased $90,000 during the year. 5. Administrative expenses include depreciation expense of $50,000. Prepare the operating activities section of the statement of cash flows using the direct method.

Sagot :

Zviko

Answer:

Cash flow from Operating Activities

Net Income                                                                     $1,030,000

Adjustment for Non Cash Items

Add Depreciation Expense                                               $50,000

Adjustment for Working Capital Changes :

Decrease in Accounts receivable                                  $350,000

Increase in Prepaid expenses                                       ($160,000)

Decrease in Accounts payable                                     ($300,000)

Decrease in Accrued expenses payable                       ($90,000)

Net Cash from Operating Activities                               $880,000

Explanation:

The Indirect method is required for this question. The Indirect method reconciles the Net Income to the Operating Cash flow by adjusting for 1. Non Cash items Previously included in Net income and 2. Changes in working capital items as shown above.

We hope our answers were useful. Return anytime for more information and answers to any other questions you have. Thank you for your visit. We're committed to providing you with the best information available. Return anytime for more. Westonci.ca is here to provide the answers you seek. Return often for more expert solutions.