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20 July, 04:53

Exercise 11-8A Calculate operating activities-indirect method (LO11-3) Hardware Suppliers reports net income of $165,000. Included in net income is a gain on the sale of land of $20,000. A comparison of this year's and last year's balance sheets reveals an increase in accounts receivable of $35,000, an increase in inventory of $20,000, and a decrease in accounts payable of $55,000. Required: Prepare the operating activities section of the statement of cash flows using the indirect method. (List cash outflows and any decrease in cash as negative amounts.)

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  1. 20 July, 06:24
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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 $165,000

    Adjustment made:

    Less : Gain on the sale of land - $20,000

    Less: Increase in accounts receivable - $35,000

    Less: Increase in inventory - $20,000

    Less: Decrease in accounts payable - $55,000

    Total of Adjustments - $130,000

    Net Cash flow from Operating activities $35,000
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