Question

Lake Norman Company reported net income of $225,000 for the current year. Depreciation recorded on buildings and equipment amounted to $75,000 for the year. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows: End of Year Beginning of Year Cash $20,000 $15,000 Accounts receivable 22,000 32,000 Inventory 50,000 60,000 Accounts payable 12,000 18,000 Prepare the cash flows from the operating activities section of the statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Answer 1

Answer:

$314000

Explanation:

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

Cash flow from Operating activities - Indirect method

Net income $225,000

Add : Depreciation expense $75,000

Add: Decrease in Accounts Receivables  $10,000

Add: Decrease in  inventory    $10,000

Less: Decrease in Accounts Payable  - $6000

Net Cash flow from Operating activities $314,000

The minus sign reflects the outflow of cash while the positive sign reflects the inflow of cash and the same is shown above