Question

The following income statement and information about changes in noncash current assets and current liabilities are reported.

SONAD COMPANY Income Statement For Year Ended December 31, 2015
Sales				$	2,172,000
Cost of goods sold					1,064,280
Gross profit					1,107,720
Operating expenses
Salaries expense	$	297,564
Depreciation expense		52,128
Rent expense		58,644
Amortization expenses—Patents		6,516
Utilities expense		23,892			438,744
					668,976
Gain on sale of equipment					8,688
Net income				$	677,664

Changes in current asset and current liability accounts for the year that relate to operations follow.

Accounts receivable	$	15,800	increase	Accounts payable	$	15,050	decrease
Inventory		20,650	increase	Salaries payable		3,050	decrease

Required:

Prepare only the cash flows from operating activities section of the statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)

Answer 1

Prepare only the cash flows from operating activities section of the statement of cash flows using the indirect method

Cash flow from operating activities
Net income		677664
Adjustment to reconcile net income
Depreciation expense	52128
Amortization expenses—Patents	6516
Gain on sale of equipment	-8688
Account receivable increase	-15800
Inventory increase	-20650
Account payable decrease	-15050
Salary payable decrease	-3050
		-4594
Net cash flow from operating activities		673070