Question

Blossom Company’s income statement for the year ended December 31, 2017, contained the following condensed information. Service revenue $844,000 Operating expenses (excluding depreciation) $628,000 Depreciation expense 60,000 Loss on sale of equipment 26,000 714,000 Income before income taxes 130,000 Income tax expense 40,000 Net income $90,000 Blossom’s balance sheet contained the following comparative data at December 31. 2017 2016 Accounts receivable $37,000 $56,000 Accounts payable 43,000 29,000 Income taxes payable 4,000 8,100 (Accounts payable pertains to operating expenses.) Prepare the operating activities section of the statement of cash flows using the indirect method.

Answer 1

Solution:

Blossom Company Statement of cash flows (Partial) for the year ended December 31, 2017
Details	Amount($)	Amount($)
Cash flows from operating activities:
Net income		$90,000
Adjustments to reconcile net income to
Net cash provided by operating activities:
Depreciation expense	$60,000
Sale of equipment loss	$26,000
Increase in accounts payable	$14,000
Decrease in accounts receivables	$19,000
Decrease in income taxes payable	($4,100)	$114,900
Net cash provided by operating activities		$204,900