The Net Income Reported on the Income Statement for the Current

question 53

Essay

The net income reported on the income statement for the current year was $58,000. Depreciation recorded on fixed assets for the year was $24,000. In addition, equipment with an original cost of $130,000 and accumulated depreciation of $115,000 on the date of the sale, was sold for $20,000. Balances of the current asset and current liability accounts at the end and beginning of the year are listed below. Prepare the cash flows from operating activities section of a statement of cash flows using the indirect method. $\begin{array}{lrr}&\text { End } & \text { Beginning } \\\text { Cash } & \$ 65,000 & \$ 70,000 \\\text { Accounts receivable (net) } & 70,000 & 63,000 \\\text { Inventories } & 85,000 & 102,000 \\\text { Prepaid expenses } & 4,000 & 4,500 \\\text { Accounts payable (merchandise creditors) } & 50,000 & 58,000 \\\text { Cash dividends payable } & 4,500 & 6,500 \\\text { Sal aries payable } & 6,000 & 7,500\end{array}$

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