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Homework answers / question archive / Changes in Current Operating Assets and Liabilities—Indirect Method Covington Corporation's comparative balance sheet for current assets and liabilities was as follows: Dec
Changes in Current Operating Assets and Liabilities—Indirect Method
Covington Corporation's comparative balance sheet for current assets and liabilities was as follows:
Dec. 31, 20Y2Dec. 31, 20Y1Accounts receivable$18,900 $18,100 Inventory50,900 51,600 Accounts payable21,700 19,900 Dividends payable25,000 23,000
Adjust net income of $106,000 for changes in operating assets and liabilities to arrive at net cash flow from operating activities.
| Computation of Cash Flows from Operating Activities: | |
| Particulars | Amount |
| Net income | $106,000 |
| Adjustments to reconcile net income to net cash flow from operating activities: | |
| Changes in current operating assets and liabilities: | |
| Increase in accounts receivable ($18900 - $18100) | -800 |
| Decrease in inventory ($51600 - $50,900) | 700 |
| Increase in accounts payable ($21,700- $19,900) | 1800 |
| Net Cash Flow from Operating Activities | $107,700 |
