Macavoy Corporation’s comparative balance sheet for current assets and liabilities was as follows:

Macavoy Corporation’s comparative balance sheet for current assets and liabilities was as follows:











Dec. 31, 2014 Dec. 31, 2013
Accounts receivable $33,000 $39,600
Inventory 22,000 18,920
Accounts payable 19,800 17,380
Dividends payable 60,500 64,900




Adjust net income of $253,000 for changes in operating assets and liabilities to arrive at net cash flow from operating activities.


Answer:












Net income…………………………….………………………………………………………… $253,000
Adjustments to reconcile net income to net cash flow from
operating activities:
Changes in current operating assets and liabilities:
Decrease in accounts receivable………………………………...……………… 6,600
Increase in inventory…………………………………..…………………………… (3,080)
Increase in accounts payable……………………………….…………………… 2,420
Net cash flow from operating activities…………………………..……………………… $258,940
Note: The change in dividends payable impacts the cash paid for dividends,
which is disclosed under financing activities.