Question

Chew Corporation prepares its statement of cash flows using the indirect method of reporting operating activities. Net income for the 2018 fiscal year was $1,269,000. Depreciation expense of $159,000 was included with operating expenses in the income statement. The following information describes the changes in current assets and liabilities other than cash:

Increase in accounts receivable $152,000
Decrease in inventories 108,000
Decrease in prepaid expenses 62,000
Decrease in salaries payable 30,000
Increase in income taxes payable 44,000

Required:
Prepare the cash flows from operating activities for 2018.

Answer 1

Cash flows from operating activities for 2016

Particulars Amount

Net income $1,269,000

Adjustments

Depreciation expense $159,000

Increase in accounts receivable -$152,000

Decrease in inventories $108,000

Decrease in prepaid expenses $62,000

Decrease in salaries payable -$30,000

Increase in income taxes payable $44,000 $32,000

Net cash inflow from operations $1,460,000