Reference no: EM13148343
The net income reported on the income statement for the current year was $210,000. Depreciation recorded on equipment and a building amounted to $62,500 for the year. Balances of the current liability accounts at the beginning and end of the year are as follows:
End of the year beginning of the year
Cash $56,000 $59,500
Accounts receivable (net) 71,000 73,400
Inventories 140,000 126,500
Prepaid expenses 7,800 8,400
Accounts payable (merchandise creditors) 62,600 66,400
Salaries payable 9,000 8,250
a) Prepare the cash flows from Operating Activities section of the statement of cash flows, using the indirect method
b) If the direct method had been used, would the net cash flow from operating activities have been the same? Explain
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Operating activities section of the statement of cash flows
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