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CALCULATOR FULL SOREN PRINTER VERSION Brief Exercise 23-5 Sarasota Corporation had the following 2017 income statement. Sales revenue Cost of goods sold Gross profit Operating expenses (includes depreciation of $22,000) Net income $182,000 132,000 50,000 48,000 $2.000 The following accounts increased during 2017: Accounts Receivable $12,000, Inventory $12,000, Accounts Payable $15,000. Prepare the cash flows from operating activities section of Sarasota's 2017 statement of cash flows using the Indirect method. (Show amounts that decrease cash flow with either a lone.. 15,000 or in parenthesis e.. (15,000).) Sarasota Corporation Statement of Cash Flows-Indirect Method (Partial) Adjustments to reconcile net income to 2 AC P2350

Answer 1

Answer

Statement of Cash flows - Indirect Method
for the year ending 31 Dec 2017
Cash flows from Operating activities:
Net Income		$2,000
Adjustment to reconcile net income to
Net Cash provided by Operating activities
Depreciation expense	$22,000
Increase in accounts receivables	($12,000)
Increase in inventory	($12,000)
Increase in accounts payable	$15,000
		$13,000
Net Cash provided by Operating activities		$15,000

No.	Conceptual Notes
1	Cash Flow Statement reflects the Cash Inflows and Outflows during a period of time.
2	Effects of Non - Cash Transaction are adjusted from Net Income.
3	Depreciation Expense, Amortisation expenses are Added back to Net Income in Cash Flow Statement.
4	Decrease in Current Assets OR Increase in Current Liabilities are ADDED to Net Income
5	Increase in Current Assets OR Decrease in Current Liabilities are DEDUCTED from Net Income