Cash Flows from Operating Activities-Indirect Method
the Data Below Are

question 85

Essay

Cash flows from operating activities-indirect method
The data below are taken from the financial statements of the Rutherford Corporation:
$\begin{array}{|l|r|r|}\hline \text { Income Statement: } & {\mathbf{2 0 0 9}} \\\hline & \\\hline \text { Net income } & \$ 840,000\\\hline \text { Depreciation expense } & 170,000 \\\hline \text { Amortization of patent } &30,000 \\\hline \text { Gain on sale of equipment } & 110,000 \\\hline\\\hline \text { Balance Sheet: } & \mathbf{1 2 / 3 1 / 0 9} & \mathbf{1 2 / 3 1 / 0 8} \\\hline & & \\\hline \text { Accounts receivable } & \$ 710,000 & \$ 680,000 \\\hline \text { Inventory } & 840,000 & 800,000 \\\hline \text { Prepaid expenses } & 30,000 & 35,000 \\\hline \text { Accounts payable } & 660,000 & 630,000 \\\hline \text { Accrued expenses payable } & 430,000 & 440,000 \\\hline\end{array}$
Complete the partial statement of cash flows for the year ended December 31, 2009, showing the computation of net cash flows from operating activities by the indirect method:

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Definitions:

Production Budget

An estimate of the total cost of production that includes direct labor, raw materials, and overhead expenses for a specific period.

Budgeted Unit Sales

The forecasted quantity of products that a company plans to sell over a specific period.

Beginning Finished Goods

The inventory of finished products available for sale at the start of an accounting period.

Ending Finished Goods

The value of goods available for sale at the end of an accounting period.