Reference no: EM132805530

Problem 1: Falcons Limited reported net earnings of $285,000 for the current year. Depreciation expense recorded on buildings and equipment amounted to $92,000 for the year. Balances of the current assets and current liabilities accounts at the beginning and end of the year are as below. Prepare the operating activities section of the cash flow statement using the indirect method.

                          Beginning of year           End of year Difference
Cash                        $15,000                       $20,000
Trade receivables         22,500                          16,500
Inventories                 57,000                             52,000
Prepaid expenses            4,000                            8,500
Trade payables              18,000                           14,000
Income taxes payable       900                                1,200