Answer:
2017 Cashflows from operations Skysong, Inc.
Amount in Dollars
Net earnings 196,870.00
<u>Additions to cash</u>
Depreciation 36,940.00
Loss on asset disposal 4,720.00
Increase in accounts receivable (13,760.00)
Increase in accounts payable 16,070.00
Increase in prepaid expenses (4,250.00)
Net cash flows from operating activities 236,590.00
Explanation:
Using the Indirect method, Depreciation as a non cash item is added back to the net income. An increase in an asset is an outflow of cash while an increase in a liability is treated as an inflow of cash. Hence, operating activities section of the statement of cash flows for 2017 is as shown below;
Amount in Dollars
Net earnings 196,870.00
<u>Additions to cash</u>
Depreciation 36,940.00
Loss on asset disposal 4,720.00
Increase in accounts receivable (13,760.00)
Increase in accounts payable 16,070.00
Increase in prepaid expenses (4,250.00)
Net cash flows from operating activities 236,590.00