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20 July, 09:30

Macrosoft Company reports net income of $61,000. The accounting records reveal depreciation expense of $76,000 as well as increases in prepaid rent, accounts payable, and income tax payable of $56,000, $11,000, and $16,000, respectively. Prepare the operating activities section of Macrosoft's 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, 10:28
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    Cashflow from Operating Activities $

    Net income 61,000

    Add: items not involving movement of cash

    Depreciation 76,000

    137,000

    Changes in working capital:

    Increase in prepaid rent (56,000)

    Increase in accounts payable 11,000

    92,000

    Less: Tax 16,000

    Cashflow from operating activities 76,000

    Explanation:

    Cashflow from operaing activities using the indirect method equals net income plus depreciation minus increase in prepaid rent plus increase in accounts payable minus tax.
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