Question

Exercise 12-6 Indirect: Cash flow from operations LO P2 Salud Company reports the following information. Use the indirect method to prepare only the operating activities section of its statement of cash flows for the year ended December 31. (Amounts to be deducted should be indicated with a minus sign.) 16.66 points Selected Annual Income Statement Data Selected Year-End Balance Sheet Data Net income $400,000 Accounts receivable increase $40,000 Depreciation expense 80,000 Prepaid expenses decrease 12,000 Gain on sale of machinery 20,000 Accounts payable increase 6,000 Wages payable decrease 2,000 eBook Print References Cash flows from operating activities Adjustments to reconcile net income to operating cash flow Income statement items not affecting cash Changes in current operating assets and liabilities

Answer 1

Answer -

3. Answer -

Cash flows from operating activities
Net income		$400000
Adjustments to reconcile net income to operating cash flow
Income statement items not affecting cash
Depreciation expense	$80000
Gain on sale of machinery	($20000)
		$60000
Changes in current operating assets and liabilities
Increase in accounts receivable	($40000)
Decrease in prepaid expenses	$12000
Increase in accounts payable	$6000
Decrease in wages payable	($2000)
		($24000)
Net cash provided by operating activities		$436000

2. Answer -

Cash flows from operating activities
Net income		$481540
Adjustments to reconcile net income to net cash provided by operating
Income statement items not affecting cash
Depreciation expense	$44200
Amortization expense-Patents	$4200
Gain on sale of equipment	($6200)
		$42200
Changes in current operating assets and liabilities
Increase in accounts receivable	($30500)
Increase in inventory	($25000)
Decrease in accounts payable	($12500)
Decrease in salaries payable	($3500)
		($71500)
Net cash provided by operating activities		$452240