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Fitz Company reports the following information.

Selected Annual Income Statement Data Selected Year-End Balance Sheet Data

Net income $412,000 Accounts receivable decrease $33,400
Depreciation expense 50,000 Inventory decrease 47,500
Amortization expense 7,300 Prepaid expenses increase 6,200
Gain on sale of plant assets 7,400 Accounts payable decrease 10,900
Salaries payable increase 1,300

Required:
Use the indirect method to prepare the operating activities section of its statement of cash flows for the year ended December 31.

Sagot :

Answer:

Net cash from operating activities is $527,000.

Explanation:

This can be prepared as follows:

Fitz Company

Statement of cash flows

(Operating activities section only)

For the year ended December 31.

Details                                                                      $          

Net income                                                        412,000

Adjustment to reconcile net income:

Depreciation expense                                       50,000

Amortization expense                                         7,300

Gain on sale of plant assets                              (7,400)

(Increase) decrease in current assets:

Accounts receivable decrease                         33,400

Inventory decrease                                            47,500

Prepaid expenses increase                               (6,200)

Increase (decrease) in current liabilities:

Accounts payable decrease                            (10,900)

Salaries payable increase                                    1,300  

Net cash from operating activities               527,000  

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