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16 June, 19:21

Alfonza Incorporated presents its statement of cash flows using the indirect method. The following accounts and corresponding balances were drawn from the company's 2017 and 2016 yearend balance sheets:

Account Title 2017 2016

Accounts receivable $ 15,000 $ 20,000

Accounts payable 8,750 9,200

The 2017 income statement showed net income of $25,400.

Required

Prepare the operating activities section of the statement of cash flows. (Amounts to be deducted should be indicated with a minus sign.)

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Answers (1)
  1. 16 June, 19:45
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    The preparation of the Cash Flows from Operating Activities-Indirect Method is shown below:

    Cash flow from Operating activities - Indirect method

    Net income $25,400

    Adjustment made:

    Add: Decrease in accounts receivable $5,000 ($20,000 - $15,000)

    Less: Decrease in accounts payable - $450 ($8,750 - $9,200)

    Total of Adjustments $4,550

    Net Cash flow from Operating activities $29,950
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