Question

he accounting records of Westlake Industries provided the data below. Net income $ 200,000 Depreciation expense 15,000 Decrease in inventory 12,000 Increase in accounts receivable 1,400 Increase in interest payable 1,600 Amortization of bond discount 3,000 Increase in accounts payable 7,000 Cash dividends paid 20,000 Required: Prepare a reconciliation of net income to net cash flows from operating activities

Answer 1

$237,200

Step-by-step explanation:

The preparation of the Cash Flows from Operating Activities—Indirect Method is shown below:

Cash flow from Operating activities - Indirect method

Net income $200,000

Adjustment made:

Add : Depreciation expense $15,000

Add: Amortization of bond discount $3,000

Less: Increase in accounts receivable -$1,400

Add: Decrease in inventory $12,000

Add: Increase in accounts payable $7,000

Add: Increase in interest payable $1,600

Total of Adjustments $37,200

Net Cash flow from Operating activities $237,200