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Exercise 12-4 Indirect: Cash flows from operating activities LO P2 The following income statement and information...

Exercise 12-4 Indirect: Cash flows from operating activities LO P2

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, 2017
Sales $ 2,029,000
Cost of goods sold 994,210
Gross profit 1,034,790
Operating expenses
Salaries expense $ 277,973
Depreciation expense 48,696
Rent expense 54,783
Amortization expenses–Patents 6,087
Utilities expense 22,319 409,858
624,932
Gain on sale of equipment 8,116
Net income $ 633,048


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

Accounts receivable $ 38,600 increase Accounts payable $ 15,550 decrease
Inventory 16,000 increase Salaries payable 2,650 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.)

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Answer #1

Cash flow from operating activities :

Cash flow from operating activities
Net income 633048
Adjustment to reconcile net income to cash flow from operating activities
Depreciation expense 48696
Amortization expense 6087
Gain on sale of plant Equipment -8116
Increase account receivable -38600
Increase inventory -16000
Decrease account payable -15550
Decrease salaries payable -2650
-26133
Net cash flow from operating activities 606915
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