Question

The accounting records of EZ Company provided the data below. Net income $ 60,450 Depreciation expense 11,950 Increase in inventory 3,975 Decrease in salaries payable 2,835 Decrease in accounts receivable 5,300 Amortization of patent 885 Amortization of premium on bonds 5,345 Increase in accounts payable 8,950 Cash dividends paid 17,500 Prepare a reconciliation of net income to net cash flows from operating activities. (Amounts to be deducted should be indicated with a minus sign.)

Answer 1

Net cash flow from operating activities = $75,380

Step-by-step explanation:

As per the data given in the question,

Prepare cash flow from operating activities

Particulars Amount Amount

Net income $60,450

Adjustments of non- cash effects:

Depreciation expense $11,950

Amortization of patent $885 $128,35

Changes in operating assets and liabilities:

Increase in inventory ($3,975)

Decrease in salary payable ($2,835)

Decrease in account receivable $5,300

Decrease in bond ($5,345)

Increase in accounts payable $8,950 $2,095

Net cash flow from operating activities $75,380