Question

Cemptex Corporation prepares its statement of cash flows using the indirect method to report operating activities. Net income for the 2018 fiscal year was $664,000. Depreciation and amortization expense of $95,000 was included with operating expenses in the income statement. The following information describes the changes in current assets and liabilities other than cash:

Decrease in accounts receivable $30,000
Increase in inventories 10,000
Increase prepaid expenses 9,300
Increase in salaries payable 10,800
Decrease in income taxes payable 19,000

Required:
Prepare the operating activities section of the 2018 statement of cash flows.

Answer 1

Net cash flow from operating activities $761,500

Step-by-step explanation:

The preparation of the operating activities section is as follows;

Net income $664,000

Add: depreciation & amortization $95,000

Add: Decrease in accounts receivable $30,000

Less: Increase in inventories 10,000

Less: Increase prepaid expenses 9,300

Add: Increase in salaries payable 10,800

Less: Decrease in income taxes payable 19,000

Net cash flow from operating activities $761,500