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:

Aggregate Demand

The aggregate need for products and services in an economy at a specific price level during a certain time frame.

Aggregate Demand

The total demand for all goods and services within an economy at various price levels, during a specific time period.

AD1 to AD2

Represents a shift from one aggregate demand curve to another in macroeconomic models, indicating changes in the total demand for goods and services in an economy.

Aggregate Demand

The gross requirement for products and services within an economy, priced at an overall level over a certain timeframe.