Question

During 2015, Orton Company earned net income of $464,000 which included deprecia-tion expense of $78,000. In addition, the company experienced the following changes in the account balances listed below:
Increases Decreases
Accounts payable $45,000 Accounts receivable $12,000
Inventory 36,000 Accrued liabilities 24,000
Prepaid insurance 33,000
Calculate net cash flow from operating activities using indirect method:______.

Answer 1

Answer:

$572,000

Explanation:

Cash flow from operating activities

Net income                                                                             $464,000

Adjustment for Non-Cash items :

Depreciation                                                                             $78,000

Adjustment for Changes in Working Capital items :

Increase in Accounts payable                                                $45,000

Increase in Inventory                                                             ($36,000)

Decrease in Accounts receivable                                           $12,000

Decrease in Accrued liabilities                                              ($24,000)

Decrease in Prepaid insurance                                               $33,000

Net cash flow provided by  operating activities                  $572,000

thus,

net cash flow from operating activities using indirect method is  $572,000.