Dec. 31, 2014 Dec. 31, 2013
Accounts receivable $18,000 $14,400
Inventory 34,800 29,700
Accounts payable 27,600 20,700
Dividends payable 8,400 10,800
Adjust net income of $160,000 for changes in operating assets and liabilities to arrive at net cash flow from operating activities.
Answer:
Net income…………………………………..………………………………………………… $160,000
Adjustments to reconcile net income to net cash flow from
operating activities:
Changes in current operating assets and liabilities:
Increase in accounts receivable………………………………...………………… (3,600)
Increase in inventory…………………………….…………………………………… (5,100)
Increase in accounts payable………………………….………………………… 6,900
Net cash flow from operating activities………………….……………………………… $158,200
Note: The change in dividends payable impacts the cash paid for dividends,
which is disclosed under financing activities.