Question

Macrosoft Company reports net income of $62,000. The accounting records reveal depreciation expense of $77,000 as well as increases in prepaid rent, accounts payable, and income tax payable of $57,000, $10,000, and $16,500, respectively. Prepare the operating activities section of Macrosoft's statement of cash flows using the indirect method.

Answer 1

Answer:

$108,500

Explanation:

The preparation of the operating activities section is presented below

Cash flow from operating activities

Net income $62,000

Add: depreciation expense $77,000

Add: Increase in account payable $10,000

Add: Increase in income tax payable $16,500

Less: Increase in prepaid rent -$57,000

Cash flow from operating activities $108,500

The negative amount shows cash outflow and the positive amount shows the cash inflow