Question

Blue Spruce Corp. reported net income of $194,740 for 2022. Blue Spruce Corp. also reported depreciation expense of $36,900 and a loss of $5,030 on the disposal of plant assets. The comparative balance sheets show an increase in accounts receivable of $15,650 for the year, a $15,880 increase in accounts payable, and a $4,250 increase in prepaid expenses. Prepare the operating activities section of the statement of cash flows for 2022. Use the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).) Blue Spruce Corp. Partial Statement of Cash Flows Choose the accounting period Select an opening section name Select an item $Enter a dollar amount Adjustments to reconcile net income to Select an opening name for subsection Select an item $Enter a dollar amount Select an item Enter a dollar amount Select an item Enter a dollar amount Select an item Enter a dollar amount Select an item Enter a dollar amount Enter a total amount for this subsection Select a closing section name $Enter a total amount for this section

Answer 1

Answer:

Blue Spruce Corp

Statement of Cash Flows for the year ended December 31, 2022

Operating activities section:

Net income                                          $194,740

add non-cash flow items:

    Depreciation expense                      36,900

    Loss on disposal of plant assets     54,030

Adjusted operating income             $285,670

Working capital changes:

Increase in accounts receivable         (15,650)

Increase in accounts payable              15,880

Increase in prepaid expenses             (4,250)

Net cash from operating activities $281,650

Explanation:

a) Data and Calculations:

Reported 2022 net income = $194,740

Depreciation expense = $36,900

Loss on disposal of plant assets = $54,030

Increase in accounts receivable = $15,650

Increase in accounts payable $15,880

Increase in prepaid expenses $4,250

b) The operating activities section is one section of the Statement of Cash Flows.  It shows the cash inflows and outflows from Spruce's normal business activities.  Other sections of Spruce's Statement of Cash Flows that show activities outside operating activities are the investment activities section and financing activities.