Question

Tamarisk, Inc. reported net income of $194,700 for 2020. Tamarisk also reported depreciation expense of $47,700 and a loss of $4,900 on the disposal of plant assets. The comparative balance sheet shows a decrease in accounts receivable of $19,900 for the year, a $21,900 increase in accounts payable, and a $3,200 decrease in prepaid expenses.
Prepare the operating activities section of the statement of cash flows for 2020. Use the indirect method.

Answer 1

Answer:

$292,300

Explanation:

The preparation of the Cash Flows from Operating Activities—Indirect Method is presented  below:

Cash flow from Operating activities

Net income $194,700

Add: Depreciation expense $47,700

Add: Loss on the disposal of plant assets $4,900

Add: Decrease in accounts receivable $19,900

Add: Increase in accounts payable $21,900

Add: Decrease in prepaid expenses $3,200

Net Cash flow from Operating activities        $292,300