Reference no: EM132807011

The net income reported on the income statement for the current year was $275,000. Depreciation recorded on fixed assets and amortization of patents for the year were $40,000 and $9,000, respectively.

Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows:

                                                                                End                Beginning

Cash                                                         50,000        60,000

Accounts receivable                                       112,000     108,000

Inventories                                                  105,000       93,000

Prepaid expenses                                           4,500             6,500

Accounts payable (merchandise creditors)           75,000      89,000

Problem 1: What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the indirect method?

a. $198,000

b. $296,000

c. $324,000

d. $352,000