Question

Hampton Company reports the following information for its recent calendar year. Prepare the operating activities section of the statement of cash flows for Hampton Company using the indirect method.

Income Statement Data		Selected Year-End Balance Sheet Data
Sales		Accounts receivable increase	\(10,000
Expenses	\)160,000	Inventory decrease	16,000
Cost of goods sold	100,000	Salaries payable increase	1,000
Salaries expense	24,000
Depreciation expense	12,000
Net income	$ 24,000

Short answer

Net cash provided by operating activities is $43,000

Step-by-step solution

Meaning of Cash flow statement

The cash flow statement gives information on changes in a company's Cash Equivalents and Cash throughout an accounting period.

Preparing the operating activities

The operating activities component of the cash flow statement are as follows:

Hampton Company
Statement of Cash Flows—Operating Section under Indirect Method
Cash flow from operating activities:
Net income	$24,000
Adjustments to reconcile net income to net cash provided by operating activities
Income statement items not affecting cash
Depreciation expense	12,000
Changes in current assets and liabilities
Increase in accounts receivables	(10,000)
Decrease in inventory	16,000
Increase in salaries payable	1,000
Net cash provided by operating activities	$43,000