Would the net cash flow from operating activities have been

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Cash flows from operating activities-indirect method

The net income reported on the income statement for the current year was $378,000. Depreciation recorded on equipment and a building amounted to $112,500 for the year. 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

$100,800

$107,100

Accounts receivable (net)

127,800

132,120

Inventories

252,000

227,700

Prepaid expenses

14,040

15,120

Accounts payable (merchandise creditors)

112,680

119,520

Salaries payable

16,200

14,850

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

b. If the direct method had been used, would the net cash flow from operating activities have been the same? Explain.

Reference no: EM13555723

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