Reporting and Interpreting Cash Flows from Operating Activities with loss on Sal

Question

Reporting and Interpreting Cash Flows from Operating Activities with loss on Sale of Equipment (Indirect Method)

New vision company completed its income statement and balance sheet for 2011 and provided the following information:

Service Revenue                $66,000
Expenses:
Salaries 42,000
Depreciation 7,300
Utilities 7,000
Loss on sale of equip. 1,700

(1,700 was subtracted to get 58,000--then they subtracted 66,000-58,000 to get 8,000
Net income 8,000

Partial Balance Sheet    2011          2010

Account receivable       12,000       24,000
Salaries payable           19,000       10,000
Other accrued liablities 5,000         9,000
Land                            52,000       57,000


**Above is the whole question. I am not sure how to set this up from an Indirect method standpoint. I am having a difficult time knowing which items are increase or decreases..I am just suppose to present the operating activities section of the cash flow statement using the indirect method...any help would be great!

Explanation / Answer

Net income                                                  =$8000 Adjustments to reconcile net income to net cash provided by operting activities Depreciation expenses                                  =$7300 loss on sale of equipment                              =$1700 Decrease in accounts receivable                    =$12000 increase in salaries payable                            =$9000 Decrease in accurred liabilities                       =($4000) Net cash provided by operating activities       =$34000

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