Net income $270,000
Depreciation expense 30,000
Gain on disposal of equipment 24,600
Decrease in accounts receivable 16,800
Decrease in accounts payable 4,320
Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method.
Answer:
Cash flows from operating activities:
Net income……………………………………….………………………… $270,000
Adjustments to reconcile net income to net cash flow
from operating activities:
Depreciation…………………………………………...…………… 30,000
Gain on disposal of equipment…………………………………. (24,600)
Changes in current operating assets and liabilities:
Decrease in accounts receivable……………………..……… 16,800
Decrease in accounts payable……………………………... (4,320)
Net cash flow from operating activities……………………..……… $287,880