Question

Bock Show Me How Calculator Determining Net Income from Net Cash Flow from Operating Activities Curwen Inc. reported net cash flow from operating activities of $357,500 on its statement of cash flows for the year ended December 31. The following information was reported in the "Cash flows from operating activities" section of the statement of cash flows, using the indirect method: Decrease in income taxes payable $7,700 Decrease in inventories 19,140 Depreciation 29,480 Gain on sale of investments 13,200 Increase in accounts payable 5,280 Increase in prepaid expenses 2,970 Increase in accounts receivable 14,300 a. Determine the net income reported by Curwen Inc. for the year ended December 31 b. Curwen's net income is different than net cash flow from operating activities. Which of the following could possibly be the reason for such difference? a. Because depreciation expense which has no effect on cash flows from operating activities. b. Changes in current operating assets and liabilities that are added or deducted. c. Changes in fixed assets and liabilities that are added or deducted. d. Gain from sales of investment is included in net income while the sales proceeds are added in operating activities of cash flow statements. Next > Check My Work Save and Exit Submit Assignment for Grading

Answer 1

Requirement A $ 357,500.00 Net Cash Flow From Operating Activities Add: Increase in Accounts Receivable Increase in prepaid expenses Decrease in Income tax payable Gain on sale of investments $ 14,300.00 $ 2,970.00 $ 7,700.00 $ 13,200.00 $ 38,170.00 $ 395,670.00 Deduct : Depreciation Decrease in Inventories Increase in Accounts Payable Net Income As per Income Statement $ 29,480.00 $ 19,140.00 $ 5,280.00 $ (53,900.00) $ 341,770.00

Requirement B (a). Because Depreciation expense which has no effect on cash flow from operating activities (b). Changes in Current operating assets and liabilities that are added or deducted