Reference no: EM132714418

Problem 1: Falcons Limited reported net earnings of $285,000 for the current year. Depreciation expense recorded on buildings and equipment amounted to $92,000 for the year. Balances of the current assets and current liabilities accounts at the beginning and end of the year are as below. Prepare the operating activities section of the cash flow statement using the indirect method.

                               Beginning of year          End of year Difference
Cash                       $15,000                              $20,000
Trade receivables       22,500                              16,500
Inventories                57,000                             52,000
Prepaid expenses          4,000                            8,500
Trade payables          18,000                                 14,000
Income taxes payable   900                             1,200