Question

a) Mike Corporation. Accounts Department have compiled the following data for the year ended December 31st 2019: 35.000 140.000 Payment of dividends Proceeds from issuance of common shares Sales revenue Increase in operating current assets other than cash Repurchase of common shares Cost of goods sold $ 6,000 Other operating expenses Purchase of equipment 20,000 Decrease in operating current 224,000 liabilities Payment of note payable 30,000 Proceeds from sale of land 5,000 Depreciation expense $100,000 5.000 30.000 60.000 8.000 Prepare the operating activities section of Mike's statement of cash flows for the yew ended December 31, 2019. Please uses the indirect method for operating cash flows Answer:

Answer 1

Ans.	Mike Corporation
	Partial Statement of Cash Flows
	For the Year ended December 31, 2019
	Cash flow from operating activities:
	Net income		$81,000
	Adjustments to reconcile Net income to
	Net cash provided by Operating Activities:
	Add: Depreciation expense	$8,000
	Less: Increase in operating current assets	-$30,000
	Less: Decrease in operating current liabilities	-$5,000
			-$27,000
	Net cash from operating activities		$54,000
	*Explanations:
	*Decrease in current liabilities and Increase in current assets other than cash is deducted from Net Income.
	*Increase in current liabilities and Decrease in current assets other than cash is added to Net Income.
	*Non cash & Non operating expenses are added to Net income.
	*Non cash & Non operating income are deducted from Net income.
	*Working notes :
	*Calculations for net income :
	Sales revenue	$224,000
	Less: Expenses:
	Cost of goods sold	$100,000
	Depreciation expenses	$8,000
	Other operating expenses	$35,000
	Total Expenses	$143,000
	Net income	$81,000