Question

Fitz Company reports the following information.

Selected Annual Income Statement Data Selected Year-End Balance Sheet Data
Net income $409,000 Accounts receivable decrease $37,300
Depreciation expense 46,800 Inventory decrease 44,500
Amortization expense 7,700 Prepaid expenses increase 6,900
Gain on sale of plant assets 6,300 Accounts payable decrease 10,000
Salaries payable increase 2,000

Required:
Use the indirect method to prepare the operating activities section of its statement of cash flows for the year ended December 31.

Answer 1

Answer and Explanation:

The preparation of the operating activities section is presented below:

Net income $409,000

Add: Accounts receivable decrease $37,300

Add: Depreciation expense 46,800

Add: Inventory decrease 44,500

Add Amortization expense 7,700

Less: Prepaid expenses increase -6,900

Less: Gain on sale of plant assets -6,300

Less: Accounts payable decrease -10,000

Add: Salaries payable increase -2,000

Net cash flow from operating activities $524,100