Question

Windsor, Inc. reported net income of $200,980 for 2022. Windsor, Inc. also reported depreciation expense of $34,880 and a loss of $4,630 on the disposal of plant assets. The comparative balance sheets show an increase in accounts receivable of $14,040 for the year, a $16,780 increase in accounts payable, and a $4,390 increase in prepaid expenses.

Required:
Prepare the operating activities section of the statement of cash flow for 2022.

Answer 1

Answer and Explanation:

The preparation of the operating activities section is presented below;

Cash flows from operating activities

Net income $200,980.00

Adjustments made

Depreciation expense 34,880.00

Loss on sale of plant asset $4,630.00

Increase in accounts receivable $(14,040.00)

Increase in accounts payable $16,780.00

Increase in prepaid expense $(4,390.00)

Net cash from Operating Activities $238,840.00