Question

Arundel Company disclosed the following information for its recent calendar year.

Income Statement Data					Selected Year-End Balance Sheet Data
Revenues	$	115,000			Accounts receivable decrease	$	29,000
Expenses:					Purchased a machine for cash		21,000
Salaries expense		75,000			Salaries payable increase		26,000
Utilities expense		32,000			Other accrued liabilities decrease		18,000
Depreciation expense		28,200
Other expenses		8,200
Net loss	$	(28,400	)

Prepare the operating activities section of the statement of cash flows using the indirect method. (Any loss or amounts to be deducted should be indicated with a minus sign.)

Answer 1

Solution

Arundel Company
Cash Flow Statement (Partial)
For the year ended December 31
Cash Flow from Operating Activities:
Net Income (loss)		$        (28,400.00)
Add: Adjustments to reconcile net income to
Net cash from operating activities
Depreciation expense	$        28,200.00
Change in current assets and current liabilities
Accounts receivable decrease	$        29,000.00
Salaries payable increase	$        26,000.00
Other accrued liabilities decrease	$      (18,000.00)
		$          65,200.00
Cash Flow from Operating Activities		$          36,800.00

.General notes for cash flow
Cash is increased when Current liability increase or Current asset Decrease.
Cash is Decreased when Current liability Decrease or Current asset Increase.
Depreciation or loss on sale of any asset is a non cash expense hence it will be added to net income to get operating cash
Profit on sale of asset or investment is a non cash profit and hence will be deducted from operating income.