Question

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, 2017. (Amounts to be deducted should be indicated with a minus sign.) Selected 2017 Income Statement Data Net income Depreciation expense Gain on sale of machinery Selected Year-End 2017 Balance Sheet Data $415,000 Accounts receivable increase 84,900 Prepaid expenses decrease 22,400 Accounts payable increase $42,000 12,900 6,200 3,100 Wages payable decrease Cash flows from operating activities Adjustments to reconcile net income to operating cash flow

Answer 1

cash flow from operating activities
net income		415,000
adjustments to reconcile net income to operating cash flow
depreciation	84,000
accounts receivable increase	(42,000)
prepaid expenses decrease	12,900
accounts payable increase	6,200
wages payable decrease	(3,100)
gain on sale of machinery	(22.,400)
		35,600
net cash provided by operating activities		450,600

note:

depreciation is added back as it is a non cash expense.

gain on sale of machinery is deducted since it is a cashflow from financing activitiy.

current assets increase is deducted and vice versa.

current liabilities increase is added and vice versa.