Question

The following income statement and information about changes in noncash current assets and current liabilities are reported. Sonad Company Income Statement For Year Ended December 21, 2017 Sales $1,828,000 Cost of Goods Sold 991,000 Gross Profit 837,000 Operating Expenses Salaries Expense $245,535 Depreciation Expense 44,200 Rent Expense 49,600 Amortization Expense-Patents 4,200 Utilities Expense 18,125 361,660 Gain on Sale of Equipment 6,200 475,340 Net Income 481,540 Changes in current asset and current liability accounts for the year that relate to operations follow. Accounts Receivable Inventory $30,500 increase Accounts Payable $12,500 decrease 3,500 decrease 25,000 increase Salaries Payable Prepare only the cash flows from operating activities section of the statement of cash flows using the indirect method.

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 $481,540

Adjustment made:

Add : Depreciation expense $44,200

Add: Amortization Expense-Patents $4,200

Less: Gain on Sale of Equipment - $6,200

Less: Increase in accounts receivable -$30,500

Less: Increase in inventory -$25,000

Less: Decrease in accounts payable -$12,500

Less: Decrease in salaries payable -$3,500

Total of Adjustments - $29,300

Net Cash flow from Operating activities $452,240