Question

Required information

Use the following information for the Problems below.
Lansing Company’s 2017 income statement and selected balance sheet data (for current assets and current liabilities) at December 31, 2016 and 2017, follow.

LANSING COMPANY
Income Statement
For Year Ended December 31, 2017
Sales revenue $ 118,200
Expenses
Cost of goods sold 49,000
Depreciation expense 15,500
Salaries expense 25,000
Rent expense 9,700
Insurance expense 4,500
Interest expense 4,300
Utilities expense 3,500
Net income $ 6,700


LANSING COMPANY
Selected Balance Sheet Accounts
At December 31 2017 2016
Accounts receivable $ 6,300 $ 7,200
Inventory 2,680 1,890
Accounts payable 5,100 6,000
Salaries payable 1,020 770
Utilities payable 360 230
Prepaid insurance 330 420
Prepaid rent 360 250
Problem 16-1A Indirect: Computing cash flows from operations LO P2
Required:
Prepare the cash flows from operating activities section only of the company’s 2017 statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)

LANSING COMPANY
Cash Flows from Operating Activities—Indirect Method
For Year Ended December 31, 2017
Cash flows from operating activities:
Adjustments to reconcile net income to net cash provided by operations:

Answer 1

Step-by-step explanation:

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

Cash flow from Operating activities - Indirect method

Net income $6,700

Adjustment made:

Add : Depreciation expense $15,500

Add: Decrease in accounts receivable $900 ($6,300 - $7,200)

Less: Increase in inventory -$790 ($2,680 - $1,890)

Less: Decrease in accounts payable -$900 ($5,100 - $6,000

Add: Increase in salaries payable $250 ($1,020 - $770)

Add: Increase in utility payable $130 ($360 - $230)

Less: Decrease in prepaid insurance -$90 ($330 - $420

Add: Increase in prepaid rent $110 ($360 - $250)

Total of Adjustments $15,110

Net Cash flow from Operating activities $21,810