Question

The accounting records of Eastlake Industries provided the data below.

Net income $308,000
Depreciation expense 19,000
Increase in inventory 2,400
Increase in accounts receivable 1,480
Decrease in interest payable 1,680
Amortization of bond premium 3,800
Increase in accounts payable 7,800
Cash dividends paid 28,000
Required: Prepare a reconciliation of net income to net cash flows from operating activities.

Answer 1

Please see the solution below:

Step-by-step explanation:

CASH FLOWS FROM OPERATING ACTIVITIES $

Net Income 308,000

Adjustments to reconcile net income to

net cash provided by operating activities:

Depreciation on Fixed Assets 19,000

Amortization of bond premium 3,800

(Increase) Decrease in Current Assets:

Inventory (2,400)

Accounts Receivables (1,480)

Increase (Decrease) in Current Liabilities:

Interest Payable (1,680)

Accounts Payable 7,800

NET CASH PROVIDED BY OPERATING ACTIVITIES 333,040