Hardware suppliers reports net income of $149,000. included in net income is a gain on the sale of land of $12,000. a comparison of this year’s and last year’s balance sheets reveals an increase in accounts receivable of $19,000, an increase in inventory of $12,000, and a decrease in accounts payable of $39,000. required: prepare the operating activities section of the statement of cash flows using the indirect method.

Explanation:

The preparation of the Cash Flows from Operating Activities—Indirect Method is shown below:

Cash flow from Operating activities - Indirect method

Net income $149,000

Adjustment made:

Less: Gain on the sale of land -$12,000

Less: Increase in accounts receivable -$19,000

Less: Increase in inventory -$12,000

Less: Decrease in accounts payable -$39,000

Total of Adjustments -$82,000

Net Cash flow from Operating activities                    $67,000

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