Explain the cash flows from operating activities section


The net income reported on the income statement for the current year was $720,000. Depreciation recoreded on store equipment for the year amounted to $32,700. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows:

  • End of Year Beginning of Year
  • Cash $78,450 $ 72,300
  • Accounts receivable(net) $56,250 $ 53,400
  • Merchandise inventory $76,800 $ 81,330
  • Prepaid Expenses $ 9,000 $ 6,900
  • Accounts Payable(merchandise creditors) $73,500 $68,400
  • Wages Payable $40,200 $44,700

Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method.

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Accounting Basics: Explain the cash flows from operating activities section
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