Statement of cash flow in indirect method?

End of the year information for the Spring Company:

Income statement data: 2001 2000

Depriciation Expense....$20,000

Loss on sale of Equipment...$10,000

Net Income...$200,000

Balance sheet data: 2001

Account Receivable....$40,000 $45,000 (2000)

Merchandise inventory.....$30,000 $20,000 (2000)

Account payabl.....$25,000 $ 23000 (2000)

Accrued interest payable.....$8,000 $ 9000 (2000)

Spring Company uses the indirect method for the statement of cash flows.Net cash flows from operating activities for 2001 would be----------------------

a)$196,000

b)$200,000

c)$206,000

d)$226,000

Statement of cash flow in indirect method?military loans

Before I start, you should note that there is no interest expense this year given in the income statement data, but there is a drop in accrued interest payable of $1k. That means that the interest was accrued in the past and $1k was paid out this year. Interest received and paid must be disclosed separately in the cash flow statement. So now we can start.

Cash flows from operating activities:

Net income 200,000

Adjustments for:

Depreciation 20,000

Loss on sale of equipment 10,000

(Subtotal) 230,000

Decrease in AR 5,000

Increase in inventories ( 10,000)

Increase in AP 2,000

Cash generated from opns 227,000 (this is a subtotal)

Interest paid ( 1,000)

Net cash from op%26#039;g activities 226,000 (final total)

The answer is (d)