Determining Net Income from Net The section of the statement of cash flows that

Question

Determining Net Income from Net The section of the statement of cash flows that reports the cash transactions affecting the determination of net income.Cash Flow from Operating Activities

Sanhueza, Inc., reported a net cash flow from operating activities of $200,000 on its statement of cash flows for the year ended December 31, 2016. The following information was reported in the Cash Flows from Operating Activities section of the A summary of the cash receipts and cash payments for a specific period of time, such as a month or a year.statement of cash flows, using the A method of reporting the cash flows from operating activities as the net income from operations adjusted for all deferrals of past cash receipts and payments and all accruals of expected future cash receipts and payments.indirect method:

Determine the net income reported by Sanhueza, Inc., for the year ended December 31, 2016.
$

Decrease in income taxes payable $4,200 Decrease in inventories 10,400 Depreciation 16,000 Gain on sale of investments 7,200 Increase in accounts payable 2,900 Increase in prepaid expenses 1,800 Increase in accounts receivable 7,800

Explanation / Answer

Here , we have to find the income from the cash flow from operations in a revere manner. So all the items which are added/subtracted to net income to arrive at cash flow from operation shall be reversed.

Cash flow from operations 200000

Add: Decrease in income tax payable 4200

Add: Decrease in inventories 10400

Less : Depriciation -16000

Add: Gain on sale of investment 7200

Less: Increase in accounts payable - 2900

Add: Increase in prepaid Exp 1800

Add: Increase in accounts receivable 7800

Net Income 212500

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