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, 2017
Sales				$	2,443,000
Cost of goods sold					1,197,070
Gross profit					1,245,930
Operating expenses
Salaries expense	$	334,691
Depreciation expense		58,632
Rent expense		65,961
Amortization expenses–Patents		7,329
Utilities expense		26,873			493,486
					752,444
Gain on sale of equipment					9,772
Net income				$	762,216

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

Accounts receivable	$	40,400		increase		Accounts payable	$	12,950		decrease
Inventory		35,675		increase		Salaries payable		2,050		decrease

Required:

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

Answer 1

	SONAD COMPANY
	Cash flow Statement
	for the year ended Dec 31,2017
	Cash Flow from Operating Activities
	Net Income		762216
	Add (Deduct) items to convert net income to cash basis:
	Depreciation Cost (Non Cash Expense)	58632
	Gain on Sale of Equipment (Investing Activity Part)	-9772
	Amortization Cost (Non Cash Expense)	7329
	Cash Flow before Working Capital Changes		818405
	Less: Increase in Accounts Recievable	-40400
	Less: Increase in Inventory	-35675
	Less: Decrease in Account Payable	-12950
	Less: Decrease in Salary Payable	-2050
	Net Cash Flow from Operating Activities		727330