Exercise 13-4 Sunland Co.’s current asset and liability balances for the past tw

Question

Exercise 13-4

Sunland Co.’s current asset and liability balances for the past two years are as follows. Net income for 2016 was $1,208,800, and depreciation expense was $85,800.

Using the indirect method, prepare the cash flows provided by operating activities section of the statement of cash flows for 2016. (Show amounts that decrease cash flow with either a - sign, e.g. -15,000 or in parentheses, e.g. (15,000).)

Cash flows from operating activities

December 31, 2016 December 31, 2015 Accounts Receivable $448,580 $381,600 Inventories 671,040 725,000 Accounts Payable 383,000 328,900 Accrued Liabilities 92,150 110,800

Explanation / Answer

Cash flows from operating activities Net Income $ 1,208,800 Adjustments to reconcile net income to : Depreciation expense $   85,800 Increase in accounts receivable $ (66,980) 381600-448580 Decrease in inventory $   53,960 725000-671040 Increase in accounts payable $   54,100 383000-328900 Decrease in accrued liabilities $ (18,650) 92150-110800 $     108,230 Net cash flow from operating activities $ 1,317,030

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