Question

The income statement of Sheffield Company is shown below. SHEFFIELD COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2017 Sales revenue $7,430,000 Cost of goods sold Beginning inventory $2,090,000 Purchases 4,770,000 Goods available for sale 6,860,000 Ending inventory 1,440,000 Cost of goods sold 5,420,000 Gross profit 2,010,000 Operating expenses Selling expenses 440,000 Administrative expenses 690,000 1,130,000 Net income $880,000 Additional information: 1. Accounts receivable decreased $350,000 during the year. 2. Prepaid expenses increased $150,000 during the year. 3. Accounts payable to suppliers of merchandise decreased $260,000 during the year. 4. Accrued expenses payable decreased $130,000 during the year. 5. Administrative expenses include depreciation expense of $60,000. Prepare the operating activities section of the statement of cash flows for the year ended December 31, 2017, for Sheffield Company, using the indirect method.

Answer 1

	Statement of Cash Flows(Partial)
	For the Year Ended December 31, 2017
Cash Flows from Operating Activities:
Net income		880000
Adjustments to reconcile net income to
Net cash provided by operating activities
Depreciation expense	60000
Decrease in Accounts receivable	350000
Increase in Prepaid expenses	-150000
Decrease in accounts payable	-260000
Decrease in Accrued expenses payable	-130000
		-130000
Net cash provided by operating activities		750000