Question

Hardware Suppliers reports net income of $149,000. Included in net income is a gain on the sale of land of $12,000. A comparison of this year’s and last year’s balance sheets reveals an increase in accounts receivable of $19,000, an increase in inventory of $12,000, and a decrease in accounts payable of $39,000. Required: Prepare the operating activities section of the statement of cash flows using the indirect method.

Answer 1

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 $149,000

Adjustment made:

Less: Gain on the sale of land -$12,000

Less: Increase in accounts receivable -$19,000

Less: Increase in inventory -$12,000

Less: Decrease in accounts payable -$39,000

Total of Adjustments -$82,000

Net Cash flow from Operating activities $67,000