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Northeast Inc. is preparing the company's statement of cash flows for the fiscal year just ended. Using the following information, determine the
amount of cash flows from operating activities using the Indirect method:
Net income
Gain on the sale of equipment
Proceeds from the sale of equipment
Depreciation expense-equipment
Payment of bonds at maturity
Purchase of land
Issuance of common stock
Increase in merchandise inventory
Decrease in accounts receivable
Increase in accounts payable
Payment of cash dividends
$182,000
12,300
92,300
50,000
100,000
200,000
300,000
35,400
28,800
23,700
32,000

Respuesta :

Answer:

Explanation:

Operating activities

Net Income -                                                  182000

Subtract gain on sales of equipment         (12300)

Add back depreciation expenses-                50000

Increase in inventory                                      (35400)

Decrease in accounts receivable                   28800

Increase in accounts payable                         23700

Cash flow from operating activities                                    126100

Investing activities                                        

Proceeds from sales of equipment                  92300

Purchase of land                                               (200000)

Cash flow from investing activities                                        (107700)

Financing activities

Payments of bonds at maturity                      (100000)

Issuance of stock                                             300000

Payment of cash dividend                                (32000)

Cash flow from Financing activities                                        168,000

Net increase in cash and cash equivalent                             186400                              

The amount of cash flows from operating activities using the Indirect method is $236,800.

  • The calculation is as follows:

Net Income 182000

Less: Gain on sales of equipment  (12300)

Add: depreciation expense 50000

Less: Increase in inventory (35400)

Add: Decrease in accounts receivable 28800

Add: Increase in accounts payable 23700

Cash flow from operating activities $236,800

Therefore we can conclude that The amount of cash flows from operating activities using the Indirect method is $236,800.

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