PE 16-4B Cash flows from operating activities—indirect method

Staley Inc. reported the following data:


Net income $280,000
Depreciation expense 48,000
Loss on disposal of equipment 19,520
Increase in accounts receivable 17,280
Increase in accounts payable 8,960




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…………………………………….…………………………… $280,000
Adjustments to reconcile net income to net cash flow
from operating activities:
Depreciation………………………………...……………………… 48,000
Loss on disposal of equipment……………………………..…… 19,520
Changes in current operating assets and liabilities:
Increase in accounts receivable……………………………… (17,280)
Increase in accounts payable……………………….……… 8,960
Net cash flow from operating activities……………………...……… $339,200