Question

Exercise 17-04

Gutierrez Company reported net income of $197,600 for 2020. Gutierrez also reported depreciation expense of $43,800 and a loss of $5,200 on the disposal of plant assets. The comparative balance sheet shows a decrease in accounts receivable of $12,500 for the year, a $14,500 increase in accounts payable, and a $3,200 decrease in prepaid expenses.

Prepare the operating activities section of the statement of cash flows for 2020. Use the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

GUTIERREZ COMPANY Partial Statement of Cash Flows For the Month Ended December 31, 2020December 31, 2020For the Year Ended December 31, 2020
Cash at Beginning of PeriodCash at End of PeriodCash Flows from Financing ActivitiesCash Flows from Investing ActivitiesCash Flows from Operating ActivitiesNet Cash Provided by Financing ActivitiesNet Cash Provided by Investing ActivitiesNet Cash Provided by Operating ActivitiesNet Cash Used by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet Decrease in CashNet Increase in Cash
Increase in Prepaid Expenses    Net Income    Increase in Accounts Payable    Decrease in Accounts Payable    Depreciation Expense    Decrease in Prepaid Expenses    Decrease in Accounts Receivable    Loss on Disposal of Plant Assets    Increase in Accounts Receivable		$
Adjustments to reconcile net income to
Cash at Beginning of PeriodCash at End of PeriodCash Flows from Financing ActivitiesCash Flows from Investing ActivitiesCash Flows from Operating ActivitiesNet Cash Provided by Financing ActivitiesNet Cash Provided by Investing ActivitiesNet Cash Provided by Operating ActivitiesNet Cash Used by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet Decrease in CashNet Increase in Cash
Decrease in Prepaid Expenses    Increase in Prepaid Expenses    Decrease in Accounts Receivable    Increase in Accounts Payable    Net Income    Loss on Disposal of Plant Assets    Depreciation Expense    Decrease in Accounts Payable    Increase in Accounts Receivable	$
Increase in Prepaid Expenses    Increase in Accounts Payable    Depreciation Expense    Loss on Disposal of Plant Assets    Net Income    Decrease in Prepaid Expenses    Decrease in Accounts Payable    Increase in Accounts Receivable    Decrease in Accounts Receivable
Loss on Disposal of Plant Assets    Increase in Accounts Payable    Decrease in Accounts Payable    Depreciation Expense    Increase in Accounts Receivable    Decrease in Accounts Receivable    Increase in Prepaid Expenses    Net Income    Decrease in Prepaid Expenses
Loss on Disposal of Plant Assets    Net Income    Increase in Accounts Receivable    Depreciation Expense    Decrease in Accounts Receivable    Increase in Accounts Payable    Decrease in Accounts Payable    Increase in Prepaid Expenses    Decrease in Prepaid Expenses
Decrease in Accounts Receivable    Decrease in Accounts Payable    Depreciation Expense    Increase in Prepaid Expenses    Decrease in Prepaid Expenses    Net Income    Increase in Accounts Receivable    Loss on Disposal of Plant Assets    Increase in Accounts Payable
Cash at Beginning of Period    Cash at End of Period    Cash Flows from Financing Activities    Cash Flows from Investing Activities    Cash Flows from Operating Activities    Net Cash Provided by Financing Activities    Net Cash Provided by Investing Activities    Net Cash Provided by Operating Activities    Net Cash Used by Financing Activities    Net Cash Used by Investing Activities    Net Cash Used by Operating Activities    Net Decrease in Cash    Net Increase in Cash		$

Answer 1

Cash Flow Statement (Indirect Method)
For the Year ended
Particulars	Amount $
Cash Flow from Operating Activities
Net Income	1,97,600
Adjustments
Add: Depreciation & Amortisation	43,800
Add: Loss on sale of plant	5,200
Add: Decrease in accounts receivable	12,500
Add: Increase in Accounts Payable	14,500
Add: Decrease in prepaid expenses	3,200
Total Cash Flow from Operating Activities	2,76,800