Question

Concord Corporation reported net income of $177,200 for 2017. Concord Corporation also reported depreciation expense of $35,230 and a loss of $4,920 on the disposal of plant assets. The comparative balance sheets show an increase in accounts receivable of $14,160 for the year, a $17,220 increase in accounts payable, and a $4,190 increase in prepaid expenses. Prepare the operating activities section of the statement of cash flows for 2017. Use the indirect method

Answer 1

Answer

Net income 177,200

+35230 depreciation

+4,920 loss on disposal

217,350 adjusted net income (a)

↑↓

↑AR -14,160

↑Prepaid -4,190

↑AP 17,220

Change in working Capital -1,130(b)

Cash Flow generated from operating activities 216,220

Explanation:

(a) we must remove the non-monetary account from the income statement

This means add the non-monetary expenses and losses

Subtract the non monetary revenue and gains

(b)

The increase in assets account have a negative meaning, because it is assumed the company used cash to adquire it.

Whiel increase in liabilities are positive, because the company receive aah or delay the payment of cash.