Question

Sosa Company reported net income of $190,000 for 2017. Sosa Company also reported depreciation expense of $35,000 and a loss of $5,000 on the disposal of plant assets. The comparative balance sheets show an increase in accounts receivable of $15,000 for the year, a $17,000 increase in accounts payable, and a $4,000 increase in prepaid expenses.
Prepare the operating activities section of the statement of cash flows for 2017. Use the indirect method.

Answer 1

Answer:

$228,000

Explanation:

Preparation of the operating activities section of the statement of cash flows for 2017 for Sosa Company

Sosa Company operating activities section of the statement of cash flows for 2017

Net income $190,000

Add:Depreciation expenses $35,000

Loss on disposal of plant assets $5,000

Increase in accounts payable $17,000

Less: Increase in accounts receivable($15,000)

Increase in prepaid expenses ($4,000)

Net cash flow of the operating activities $228,000

Therefore the operating activities section of the statement of cash flows for 2017 for Sosa Company will be $228,000