Exercise 171 Towson Company prepared the tabulation below at December 31, 2017 N

Question

Exercise 171 Towson Company prepared the tabulation below at December 31, 2017 Net Income Adjustments to reconcile net income to net cash provided by $340,000 operating activities: Depreciation expense Increase in accounts receivable Decrease in inventory Amortization of patent Increase in accounts payable Decrease in interest receivable Increase in prepaid expenses Decrease in income taxes payable Gain on sale of land Net cash provided (used) by operating activities $43,000 $50,000 $13,000 $4,000 $5,600 $7,000 $6,000 $1,500 $5,000 Show how each item should be reported in the statement of cash flows. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Explanation / Answer

TOWSON COMPANY Partial Statement of Cash Flows Cash flows from operating activities Net Income $ 340,000 Adjustments to reconcile net income to : Depreciation expenses $   43,000 Amortization of patent $      4,000 Gain on sale of land $   (5,000) Increase in accounts receivable $ (50,000) Decrease in inventory $   13,000 Increase in prepaid expenses $   (6,000) Increase in accounts payable $      5,600 Decrease in interest receivable $   (7,000) Decrease in income tax payable $   (1,500) Net cash flow from operating activities $ 336,100

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