The accounting records of EZ Company provided the data below.

Net income $ 50,000

Depreciation expense 7,000

Increase in inventory 1,500

Decrease in salaries payable 800

Decrease in accounts receivable 2,000

Amortization of patent 500

Amortization of premium on bonds 1,000

Increase in accounts payable 4,000

Cash dividends paid 12,000.

Prepare a reconciliation of net income to net cash flows from operating activities.

Net cash flow from operating activities = $62,200

Explanation:

EZ Company

Statement of Cash Flow

Particulars Amount ($)

Net Income 50,000

Net cash flow from operating activities:

Depreciation expense 7,000

Amortization of patent 500

Amortization of premium on bonds 1,000

Decrease in accounts receivable 2,000

Increase in inventory (1,500)

Decrease in salaries payable (800)

Increase in accounts payable 4,000

Net cash used or provided 12,200

Net cash flow from operating activities = $62,200

Cash dividend is a financing activities, that is why it is not added or deducted in the operating activities.