Question

Moore Company's net income last year was $56,000 and cash dividends declared and paid to the company stockholders was $31,000.

Changes in selected balance sheet accounts for the year appear below:Increases(Decreases)Debit Balances:Accounts receivable $ (8,000)Inventory (6,000)Prepaid Expenses 12,000Credit Balances:Accumulated depreciation 23,000Accounts payable (10,000)Accrued liabilities 7,000Taxes payable 5,000Bonds payable 40,000Based solely on this information, the net cash flows from operating activities under the indirect method on the statement of cash flows would be:
a. $79,000
b. $102,000
c. $29,000
d. $83,000

Answer 1

Option (d) is correct.

Step-by-step explanation:

Cash flow from operations (Indirect method):

= Net Income + Depreciation expense + Decrease in accounts receivable - Increase in prepaid expenses - Decrease in Accounts payable + Increase in Accrued liabilities + Increase in Taxes payable + Decrease in inventory

= $56,000 + $23,000 + $8,000 - $12,000 - $10,000 + $7,000 + $5,000 + $6,000

= $83,000