Macrosoft Company reports net income of $61,000. The accounting records reveal depreciation expense of $76,000 as well as increases in prepaid rent, accounts payable, and income tax payable of $56,000, $11,000, and $16,000, respectively. Prepare the operating activities section of Macrosoft's statement of cash flows using the indirect method. (List cash outflows and any decrease in cash as negative amounts.)

Question

Sophie Small

Business

27 March, 18:25

Macrosoft Company reports net income of $61,000. The accounting records reveal depreciation expense of $76,000 as well as increases in prepaid rent, accounts payable, and income tax payable of $56,000, $11,000, and $16,000, respectively. Prepare the operating activities section of Macrosoft's statement of cash flows using the indirect method. (List cash outflows and any decrease in cash as negative amounts.)

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Wiggles · Answer 1

Cashflow from Operating Activities $

Net income 61,000

Add: items not involving movement of cash

Depreciation 76,000

137,000

Changes in working capital:

Increase in prepaid rent (56,000)

Increase in accounts payable 11,000

92,000

Less: Tax 16,000

Cashflow from operating activities 76,000

Explanation:

Cashflow from operaing activities using the indirect method equals net income plus depreciation minus increase in prepaid rent plus increase in accounts payable minus tax.