Use the following selected date and additional information from the records of Hitchcock Corporation to answer the question that follows. Balance Sheet Data 2004 2003 Accounts Receivable $50,000 $40,000 Inventories 22,000 25,000 Prepaid Rent 13,000 5,000 Accounts payable 13,000 20,000 Salaries payable 9,000 15,000 Taxes payable 18,000 11,000 Income Statement Data 2004 Depreciation Expense 6,000 Net Income 50,000

$35,000

Explanation:

Requirement:  Prepare the Operating Activities section of the Statement of Cash Flows for the year ended 2004. Use the INDIRECT Method

Cash from Operating Activities

Particulars                                                   Amount$

Net income                                                     6000

Add: Depreciation expense                         50000

Operating Cash Flow before                        56000

Change in Working Capital

Add:

Decrease in inventory                      3000

Increase in incomes taxes payable   7000    10000

Less:

Increase in accounts receivable    10000

Increase in prepaid Rent                  8000  

Decrease in accounts payable        7000

Decrease in salaries payable          6000   -31000

Cash from Operating Activities                  $35000

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