Question

The income statement disclosed the following items for the year:

depreciation expense $55500

gain on disposal of equipment 32390

net income 423000

Ch. 16 Interactive HW+video eBook Show Me How Calculator Print Net Income 423,000 The changes in the current asset and ability accounts for the year are as follows: Increase (Decrease) Accounts receivable 58,650 Inventory (4,920) Prepaid insurance (1,850) Accounts payable (5.860) Income taxes payable 1.850 Dividends payable 1,300 a. Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, adjustments Statement of Cash Flows (partial) For the year ended Dec. 31, Cash flows from operating activities: Net Income Adjustments to reconcile net income to net cash flow from operating activities: Depreciation expense Gainon disposal of equipment Changes in current operating assets and liabilities Increase in accounts receivable Decrease in inventory Decrease in prepaid insurance Decrease in counts payable Increase in income taxes payable Net cash flow from operating activities Previous Next Check My Work more Check My Work uses remaining Save and Surger for deg Assignment Score 2.15%

Answer 1

Ans.	Statement of Cash Flows (partial)
	For the Year Ended Dec. 31
	Particulars	Amount	Amount
	Cash flow from operating activities:
	Net income	$423,000
	Adjustments to reconcile Net income to Net cash flow from Operating Activities:
	Add: Depreciation expense	$55,500
	Less: Gain on sale of land	-$32,390
	Changes in current operating assets and liabilities:
	Less: Increase in accounts receivable	-$8,650
	Add: Decrease in inventory	$4,920
	Add: Decrease in prepaid insurance	$1,850
	Less: Decrease in accounts payable	-$5,860
	Add: Increase in income taxes payable	$1,850
	Add: Increase in dividends payable	$1,300
	Net cash Provided by (Used for) Operating Activities		$441,520
	*Explanations:
	*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.