Operating Cash Flows During the year, Makenzie Company earned a net income of $41,150. Beginning and ending balances for the year for selected accounts are as follows:
There were no financing or investing activities for the year. The above balances reflect all of the adjustments needed to adjust net income to operating cash flows.
1. Prepare a schedule of operating cash flows using the indirect method.
2. Suppose that all the data in used Requirement 1 except that the ending accounts payable and cash balances are not known. Assume also that you know that the operating cash flow for the year was $13,650. What is the ending balance of accounts payable?
3. Conceptual Connection: Makenzie Company has an opportunity to buy some equipment that will significantly increase productivity. The equipment costs $25,000. Assuming exactly the same data used for Requirement 1, can Makenzie buy the equipment using this year’s operating cash flows? If not, what would you suggest be done?
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