Question

Crane Company reported net income of $172,780 for 2017. Crane Company also reported depreciation expense of $33,750 and a loss of $5,470 on the disposal of plant assets. The comparative balance sheets show an increase in accounts receivable of $14,400 for the year, a $15,400 increase in accounts payable, and a $3,680 increase in prepaid expenses.

Prepare the operating activities section of the statement of cash flows for 2017. Use the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Answer 1

Solution:

Crane Company
Statement of Cash Flows (Partial)
For the year Ended 2017
Particulars	Details	Amount
Cash Flow from Operating Activities:
Net Income		$172,780.00
Adjustments to reconcile net income to net cash provided by operations:
Depreciation Expense	$33,750.00
Loss on disposal of plant assets	$5,470.00
Increase in accounts receivables	-$14,400.00
Increase in accounts payable	$15,400.00
Increase in prepaid expenses	-$3,680.00	$36,540.00
Net Cash provided by operating activities		$209,320.00