Question

Portions of the financial statements for Alliance Technologies are provided below. $ 298,000 ALLIANCE TECHNOLOGIES Income Statement For the year ended December 31, 2021 Net sales Expenses : Cost of goods sold $ 178,000 Operating expenses 53,000 Depreciation expense 15,300 Income tax expense 18,500 Total expenses Net income 264,800 $ 33,200 ALLIANCE TECHNOLOGIES Selected Balance Sheet Data December 31, 2021, compared to December 31, 2020 Decrease in accounts receivable $ 5,300 Increase in inventory 12,300 Decrease in prepaid rent 8,300 Increase in salaries payable 4,300 Decrease in accounts payable 7,300 Increase in income tax payable 17,200 Required: Prepare the operating activities section of the statement of cash flows for Alliance Technologies using the indirect method. (List cash outflows and any decrease in cash as negative amounts.)

Answer 1

Solution:

Alliance Technologies
Statement of Cash Flows (Partial)
For the year Ended December 31, 2021
Particulars	Details	Amount
Cash Flow from Operating Activities:
Net Income	$33,200.00
Adjustments to reconcile net income to net cash provided by operations:
Depreciation Expense	$15,300.00
Decrease in accounts receivables	$5,300.00
Increase in inventory	-$12,300.00
Decrease in prepaid rent	$8,300.00
Increase in salaries payable	$4,300.00
Decrease in accounts payable	-$7,300.00
Increase in income taxes payable	$17,200.00
Net Cash provided by operating activities		$64,000.00