Question

Kennedy, Inc. reported the following data: Net income Depreciation expense Loss on disposal of equipment Gain on sale of building $118,000 15,000 (10,000) 20,000 Increase in accounts receivable Decrease in accounts payable 7,000 (2,000) Prepare the cash flows from operating activities section of the statement of cash flows using the indirect method. Dorman Company reported the following data: Net income Depreciation expense Gain on disposal of equipment Decrease in accounts receivable Decrease in account payable $225.000 25,000 20,500 14,000 3,600 Prepare the cash flows from operating activities section of the statement of cash flows using the indirect method.

Answer 1

Answer to Q#1 (First question in the list Kennedy Inc. Statement of Cash Flows (Partial using Indirect method) Cash Flow from Operating Activities: $118,000 Net Income Adjustments to reconcile net income to net cash provided by operating activities Depreciation Expense Loss on disposal of equipment Gain on sale of building Adjusted Net Income $15,000 $10,000 $20,000 [Non-cash expense and so added back] [Non-cash expense and so added back] [Non-cash income and so deducted back] $123,000 Changes in Working Capital: $7,000 $2,000 Increase in Accounts receivable Decrease in Accounts payable Changes in Working Capital, Net Net Cash provided by operating activities [Increase in current asset is a cash outflow] [Decrease in current liability is a cash outflow] $9,000 $114,000