Question:
Cemptex Corporation prepares its statement of cash flows using the indirect method to report operating
activities.
Net income for the 2013 fiscal year was $624,000. Depreciation and amortization expense of $87,000 was
included with operating expenses in the income statement. The following information describes the
changes in current assets and liabilities other than cash:
Required:
Prepare the operating activities section of the 2013 statement of cash flows.
Answer:
Cash flows from operating activities:
Net income $624,000
Adjustments for noncash effects:
Depreciation and amortization expense 87,000
Changes in operating assets and liabilities:
Decrease in accounts receivable 22,000
Increase in inventories (9,200)
Increase in prepaid expenses (8,500)
Increase in salaries payable 10,000
Decrease in income taxes payable (14,000)
Net cash flows from operating activities $711,300
Cemptex Corporation prepares its statement of cash flows using the indirect method to report operating
activities.
Net income for the 2013 fiscal year was $624,000. Depreciation and amortization expense of $87,000 was
included with operating expenses in the income statement. The following information describes the
changes in current assets and liabilities other than cash:
Required:
Prepare the operating activities section of the 2013 statement of cash flows.
Answer:
Cash flows from operating activities:
Net income $624,000
Adjustments for noncash effects:
Depreciation and amortization expense 87,000
Changes in operating assets and liabilities:
Decrease in accounts receivable 22,000
Increase in inventories (9,200)
Increase in prepaid expenses (8,500)
Increase in salaries payable 10,000
Decrease in income taxes payable (14,000)
Net cash flows from operating activities $711,300
