Exercise 16-4 Indirect: Cash flows from operating activities LO P2 The following

Question

Exercise 16-4 Indirect: Cash flows from operating activities LO P2 The following income statement and information about changes in noncash current assets and current liabilities are reported. Income Statement Sales $ 2,184,000 1,070,160 Cost of goods sold Gross proft 1,113,840 Operating expenses Salaries expense Rent expense Utilities expense $299,208 2,416 58,968 6,552 Depreciation expense Amortization expenses-Patents 24,024 441,168 672,672 8,736 Gain on sale of equipment Net income $ 681.408 Changes in current asset and current liability accounts for the year that relate to operations follow Accounts receivable$ 25,800 increase Accounts payable $13,325 decrease Inventory 4,400 decrease 19,425 increase Salaries payable Required Prepare only the cash flows from operating activities section of the statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign.) Statement of Cash Flows (partial) Cash flows from operating activities Adjustments to reconcile net income to net cash provided by operating activites Income statement items not affecting cash Changes in current operating assets and liabilities

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Answer:-

SONAD company Cash Flow statement (Using Indirect Method) Particulars Amount $ Net Income 681408 Adjustments to reconcile net income to net cash provided by opreating activities Adjustment for non cash effects Patent amortization expense 6552 Depreciation 52416 Gain on sale of Equipment -8736 Change in opreating assets & liabilities Increase in Accounts Receiviable -25800 Increase in Inventory -19425 Decrease in Accounts payable -13325 Decrease in salaries payable -4400 Net cash flow from opreating activities 668690

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