Question

Software Distributors reports net income of $53,000. Included in that number is depreciation expense of $9,000 and a loss on the sale of land of $4,800. A comparison of this year's and last year's balance sheets reveals a decrease in accounts receivable of $23,000, a decrease in inventory of $14,000, and an increase in accounts payable of $43,000. Required Prepare the operating activities section of the statement of cash flows using the indirect method.

Answer 1

Answer and Explanation:

Cash flows (Indirect method) from Operating Activities.  

Particular                                                               Amount  

Net Income                                                        $53,000

Adjustment:  

Add:   Depreciation expense                         $9,000  

           Loss on sale of land                                  $4,800  

           Decrease in A/c receivables                 $23,000  

           Decrease in Inventory                         $14,000  

           Increase in A/c payable                         $43,000  

Net Cash flows from Operating activities  $146,800