The net income reported on the income statement for the current year was $310,000.Depreciation recorded on fixed assets and amortization of patents for the year were $40,000 and $9,000,respectively.Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows:

What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the indirect method?

Question

The net income reported on the income statement for the current year was $310,000.Depreciation recorded on fixed assets and amortization of patents for the year were $40,000 and $9,000,respectively.Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows:

What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the indirect method?

Quizplus · Accepted Answer

To calculate the amount of cash flows from operating activities using the indirect method, we start with the net income and make adjustments for non-cash items and changes in current assets and liabilities:
Net income: $310,000
Add back depreciation: $40,000
Add back amortization: $9,000
Increase in accounts receivable: $15,000
Decrease in inventory: $25,000
Increase in prepaid expenses: $3,000
Increase in accounts payable: $20,000
Decrease in accrued expenses payable: $21,000
Net cash flows from operating activities: $310,000 + $40,000 + $9,000 + $15,000 - $25,000 + $3,000 + $20,000 - $21,000 = $331,000.
Therefore, the correct answer is D, $331,000.

The Net Income Reported on the Income Statement for the Current