Pettygrove Inc. reported the following data: Prepare the Cash Flows from Operati

Question

Pettygrove Inc. reported the following data:

Prepare the Cash Flows from Operating Activities section of the statement of cash flows

A summary of the cash receipts and cash payments for a specific period of time, such as a month or a year.

, using the indirect method. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Use the minus sign to indicate cash outflows, cash payments, decreases in cash and for any adjustments, if required.

In CengageNOW, an Amount Description is a text entry other than an Account that has an amount associated with it.

Net loss

Prepare the Cash Flows from Operating Activities section of the statement of cash flows

A summary of the cash receipts and cash payments for a specific period of time, such as a month or a year.

, using the indirect method. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Use the minus sign to indicate cash outflows, cash payments, decreases in cash and for any adjustments, if required.

Question not attempted.

Pettygrove Inc.

Statement of Cash Flows (partial)

1

Cash flows from operating activities:

2

3

Adjustments to reconcile net income to net cash flow from operating activities:

4

5

6

Changes in current operating assets and liabilities:

7

8

9

Solution

Pettygrove Inc.

Statement of Cash Flows (partial)

1

Cash flows from operating activities:

2

3

Adjustments to reconcile net income to net cash flow from operating activities:

4

5

6

Changes in current operating assets and liabilities:

7

8

9

Net income $397,100 Depreciation expense 45,690 Gain on disposal of equipment 37,910 Decrease in accounts receivable 27,470 Decrease in accounts payable 6,450

Explanation / Answer

A. Cash flow from operating activities using indirect method is as under: Net Income $397,100 Adjustments to reconcile net income to net cash flow from operating activities Depreciation expenses $                            45,690 Gain on sale of equipment $                          (37,910) Changes in current operating assets and liabilities: Decrease in accounts receivables $                            27,470 Decrease in accounts payable $                            (6,450) $                                  28,800 Net cash flow from operating activities $                                425,900

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