Computing cash flow from operating activities


Response to the following problem:

Roney Company's calendar-year 2011 income statement shows the following: Net Income, $364,000; Depreciation Expense, $45,000; Amortization Expense, $8,200; Gain on Sale of Plant Assets, $7,000. An examination of the company's current assets and current liabilities reveals the following changes (all from operating activities): Accounts Receivable decrease, $18,100; Merchandise Inventory decrease, $52,000; Prepaid Expenses increase, $3,700; Accounts Payable decrease, $9,200; Other Payables increase, $1,400.

Use the indirect method to compute cash flow from operating activities.

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Accounting Basics: Computing cash flow from operating activities
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