REPORTING NET CASH FLOW FROM OPERATING ACTIVITIES
The following information is available for Bernard Corporation:
|
Net income
|
$206,000
|
|
Decrease in accounts receivable
|
4,900
|
|
Increase in inventory
|
15,300
|
|
Decrease in prepaid rent
|
2,100
|
|
Increase in salaries payable
|
14,400
|
|
Increase in income taxes payable
|
11,200
|
|
Increase in notes payable
|
20,000
|
|
Depreciation expense
|
42,000
|
|
Loss on sale of equipment
|
5,000
|
Required:
1. Prepare the net cash flows from operating activities using the indirect method.
2. What are the causes of the major differences between net income and net cash flow from operating activities?