Question

Exercise 12.6 Indirect: Cash flow from。perations LO P2 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. (Amounts to be deducted should be indicated with a minus sign.) Selected Annual Income Statement Data Net income Depreciation expense Gain on sale of machinery Selected Year-End Balance Sheet Data $400,000 Accounts receivable increase 80,000 Prepaid expenses decrease 20,000 Accounts payable increase $40,000 12,000 6,000 2,000 Wages payable decrease Cash flows from operating activities Adjustments to reconcile net income to operating cash flow Income statement items not affecting cash Changes in current operating assets and liabilities

Answer 1

Cash Flow from Operating Activities
Net Income		$ 400,000.00
Adjustments to reconcile net income to operating Cash Flow
Depreciation	$   80,000.00
Accounts Receivable Increase	$ (40,000.00)
Prepaid Expenses Decrease	$   12,000.00
Accounts Payable Increase	$      6,000.00
Wages Payable Decrease	$   (2,000.00)
Gain on Sale of Machinery	$ (20,000.00)
		$    36,000.00
Net Cash Provided by operating activities		$ 436,000.00