For the year ended June 30, 2011, net income for Silk Corporation was $7,400. Depreciation expense was $2,000. During the year, Accounts Receivable increased by $4,400, Inventories increased by $7,000, Prepaid Rent decreased by $1,400, Accounts Payable increased by $14,000, Salaries Payable increased by $1,000, and Income Taxes Payable decreased by $600. Use the indirect method to prepare a schedule of cash flows from operating activities. Use the minus sign to indicate cash outflows or a decrease in cash. Solution Hi, Please find the detailed answer as follows: Notes: Increase in Current Liabilities and Decrease in Current Assets are added back to net income while calculating cash flows from operating activities. Thanks. .

1. For the year ended June 30, 2011, net income for Silk Corporation was $7,400. Depreciation
expense was $2,000. During the year, Accounts Receivable increased by $4,400, Inventories
increased by $7,000, Prepaid Rent decreased by $1,400, Accounts Payable increased by $14,000,
Salaries Payable increased by $1,000, and Income Taxes Payable decreased by $600.
Use the indirect method to prepare a schedule of cash flows from operating activities. Use the
minus sign to indicate cash outflows or a decrease in cash.
Use the indirect method to prepare a schedule of cash flows from operating activities. Use the
minus sign to indicate cash outflows or a decrease in cash.
Solution
Hi,
Please find the detailed answer as follows:
Notes:
Increase in Current Liabilities and Decrease in Current Assets are added back to net income
while calculating cash flows from operating activities.
Thanks.
Net Income 7400
Add Depreciation 2000
Add Decrease in Prepaid Expenses 1400
Increase in Accounts Payables 14000
Increase in Salaries Payables 1000
Less Increase in Accounts Receivables -4400
Increase in Inventories -7000
Decrease in Income Taxes Payable -600

2. Net Cash Flow from Operating Activities 13800