The accounting records of ez company provided the data below.
net income $ 50,000
depreciation expense 7,000
increase in inventory 1,500
decrease in salaries payable 800
decrease in accounts receivable 2,000
amortization of patent 500
amortization of premium on bonds 1,000
increase in accounts payable 4,000
cash dividends paid 12,000.
prepare a reconciliation of net income to net cash flows from operating activities.

Net cash flow from operating activities = $62,200

Explanation:

                           EZ Company

                Statement of Cash Flow

    Particulars                                                     Amount ($)

Net Income                                                           50,000

Net cash flow from operating activities:

Depreciation expense                       7,000

Amortization of patent                          500

Amortization of premium on bonds  1,000

Decrease in accounts receivable     2,000

Increase in inventory                        (1,500)

Decrease in salaries payable             (800)

Increase in accounts payable           4,000

Net cash used or provided                                   12,200

Net cash flow from operating activities        =$62,200

Cash dividend is a financing activities, that is why it is not added or deducted in the operating activities.

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