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

question 178

Essay

Cash flows from operating activities-indirect method
The data below are taken from the financial statements of the Rutherford Corporation:
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:
$\begin{array}{|l|r|r|}\hline \text { Income Statement: }&2009\\\hline \text { Net income } & \$ 840,000 \\\hline \text { Depreciation expense } & 170,000 \\\hline \text { Amortization of patent } & 30,000 \\\hline \text { Gain on sale of equipment } & 110,000 \\\hline\text { Balance Sheet: } & \mathbf{1 2 / 3 1 / 0 9} & \mathbf{1 2 / 3 1 / 0 8} \\\hline\\\hline \text { Accounts receivable } & \$ 710,000 & \$ 680,000 \\\hline \text { Inventory } & 840,000 & 800,000 \\\hline \text { Prepaid expenses } & 30,000 & 35,000 \\\hline \text { Accounts payable } & 660,000 & 630,000 \\\hline \text { Accrued expenses payable } & 430,000 & 440,000 \\\hline\end{array}$ $\text {RUTHORFORD CORPORATION}$
$\text {Partial Statement of Cash Flows}$
$\text {For the Year Ended December 31, 2009}$
$\begin{array}{|l|l|}\hline \text { Cash flows from operating activities (indirect } & \\\text { method): } & \\\hline \text { Net income } &\$ \\ \hline \text { Add: } & \\\hline &\underline{\quad\quad} \\\hline \text { Subtotal } & \$ \\\hline \text { Less: } & \\\hline &\underline{\quad\quad} \\\hline \text { Net cash flows from operating activities } & \$ \\\hline\end{array}$

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Definitions:

Antifriction Bearings

A type of bearing designed to reduce friction between rotating parts by substituting sliding friction with rolling elements, such as balls or rollers.

Roller-Element Bearings

Mechanical assemblies containing rolling elements, such as balls or rollers, placed between two rings to facilitate low-friction movement between them.

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Ball Bearings

Mechanical assemblies that consist of rolling spherical elements sandwiched between two rings, used to reduce friction and support radial and axial loads.