Whispering Winds Corp.’s income statement contained the condensed information be

Question

Whispering Winds Corp.’s income statement contained the condensed information below.

Whispering Winds Corp.
Income Statement
For the Year Ended December 31, 2017

$2,104,900

$1,332,380

119,350

34,720

1,486,450

618,450

121,520

$496,930

Whispering Winds Corp.’s balance sheet contained the comparative data at December 31.

2017

2016

Accounts payable pertain to operating expenses.

Prepare the operating activities section of the statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Adjustments to reconcile net income to

Whispering Winds Corp.
Income Statement
For the Year Ended December 31, 2017

Service revenue

$2,104,900

Operating expenses, excluding depreciation

$1,332,380

Depreciation expense

119,350

Loss on disposal of plant assets

34,720

1,486,450

Income before income taxes

618,450

Income tax expense

121,520

Net income

$496,930

Explanation / Answer

Cash flow from operating activities :

Cash flow from operating activities Net income 496930 Adjustment to reconcile net income Depreciation expenses 119350 Loss on sale of plant assets 34720 Increase account receivable (21700) Increase account payable 19530 Increase income tax payable 13020 Net cash flow from operating activities 661850

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