Question

Sheridan Company’s income statement contained the condensed information below.

Sheridan Company Income Statement For the Year Ended December 31, 2022
Service revenue				$582,000
Operating expenses, excluding depreciation		$368,400
Depreciation expense		33,000
Loss on disposal of plant assets		9,600		411,000
Income before income taxes				171,000
Income tax expense				33,600
Net income				$137,400

Sheridan Company’s balance sheets contained the following comparative data at December 31.

		2022		2021
Accounts receivable		$42,000		$36,000
Accounts payable		24,600		19,200
Income taxes payable		7,800		4,200

Accounts payable pertain to operating expenses.

Prepare the operating activities section of the statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Answer 1

statement of cash flows (Partial)

Particular	$	$
Cash flow from operating activities
Net income	137,400
Add : Adjustment to reconcile net income to net cash provided by operating activities
Depreciation expense	33,000
Loss on disposal of plant assets	9,600
Changes in current operating assets and liabilities
Accounts receivable increase	-6,000
Accounts payable increase	5,400
Income taxes payable increase	3,600
Net cash flow from operating activities		$183,000

Net cash flow from operating activities = $183,000