ny reports the following information. Use the indirect method to prepare only th

Question

ny reports the following information. Use the indirect method to prepare only the operating activities section of Salud Compa ts statement of cash fiows for the year ended December 31, 2016. (Amounts to be deducted should be indicated with a minus sign.) cted 2016 Income Statement Data elected Year-End 2016 Balance Sheet Data Net income Depreciation expense Gain on sale of machinery S 480,000 93,000 25,400 Accounts receivable increase Prepaid expenses decrease Accounts payable increase Wages payable decrease $ 42,400 17,400 7,800 2,000 Cash flows from operating activities Adjustments to reconcile net income to operating cash flow

Explanation / Answer

Ans : Statement showing cash flow from operating activity :

Net Income $ 480,000 Adjustments to reconcile net income to operating cash flow Add: Depreciation expense $ 93,000 Less: gain on sale of machinery $ -25,400 Less: accounts receivable increase $ -42,400 Add : Prepaid expense decrease $ 17,400 Add : accounts payable increase $ 7,800 Less: Wages payable decrease $ -2,000 Cash flow from operating activity $ 528,400

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