Question

Ettygrove Inc. reported the following data:

Net income $405,000
Depreciation expense 45,000
Gain on disposal of equipment 36,900
Decrease in accounts receivable 25,200
Decrease in accounts payable 6,480
1. Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method.

Answer 1

$431,280

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 $405,000

Adjustment made:

Add : Depreciation expense $45,000

Less: Gain on disposal of equipment -$36,900

Add: Decrease in accounts receivable $25,200

Less: Decrease in accounts payable -$6,480

Total of Adjustments $26,820

Net Cash flow from Operating activities $431,280