Question

ON ACK NETT Question 3 Wise Photography reported net income of $118,800 for 2020. Included in the income statement were depreciation expense of $3,300 amortiration expense of $3,500, and a gain on disposal of plant assets of $3,800. Wise's comparative balance sheets show the following balances Accounts receivable Accounts payable 12/31/19 $26,800 6,400 12/31/20 $21,900 8,900 Calculate net cash provided by operating activities for Wise Photography. (Show amounts that decrease cash flow with eg. (15,000).) the song. - 15000 or in parenthesis Wise Photography Statement of Cash Flows Adjustments to reconcile net income to Version 4.241 sinn of John Wiley

Answer 1

Solution

Wise Photography
Cash Flow Statement
For year ended 31st December 2020
A. Cash Flows from Operating Activity
Net Income		$    118,800.00
Adjustments to reconcile net income to
net cash flow from operating activities:
Depreciation expense	$     3,300.00
Amortization expense	$     3,500.00
Gain on disposal of plant asset	$   (3,800.00)
Decrease in Accounts receivables	$     4,900.00
Increase in accounts payable	$     2,500.00
		$      10,400.00
Net cash flow from Operating activities		$    129,200.00

Working

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.