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.

Question

Wesley Frost

Business

7 June, 00:42

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.

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Xavier Jenkins · Answer 1

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