The net income reported on the income statement for the current year was $210,000. Depreciation recorded on equipment and a building amount to $62,500 for the year. Balances of the current asset and current liabilities accounts at the beginning and end of the year are as follows:
|
End of Year |
Beginning of Year |
| Cash |
$56,000 |
$59,500 |
| Accounts receivable (net) |
71,000 |
73,400 |
| Inventories |
140,000 |
126,500 |
| Prepaid expenses |
7,800 |
8,400 |
| Accounts payable (merchandise creditors) |
62,600 |
66,400 |
| Salaries payable |
9,000 |
8,250 |
|
|
|
Required:
| (1) |
Prepare the Cash flows for Operating Activities section of the statement of cash flows, using the indirect method. |
| (2) |
If the direct method had been used, would the net cash flow from operating activities have been the same? Explain |