Question

Sheridan Company reported net income of $178,690 for 2022. Sheridan Company also reported depreciation expense of $32,350 and a loss of $4,690 on the disposal of plant assets. The comparative balance sheets show an increase in accounts receivable of $14,240 for the year, a $15,590 increase in accounts payable, and a $4,050 increase in prepaid expenses.

Answer 1

Cash flow from Operating activities

Net income reported $178,690

Adjustments to reconcile net income to:

Net Cash Provided by Operating Activities

Add : Depreciation expense $32,350

Add: Loss on the disposal of plant assets $4,690

Less: Increase in accounts receivable -$14,240

Add: Increase in accounts payable $15,590

Less: Increase in prepaid expenses -$4,050

Net Cash provided by operating activities $213,030

Answer 2

$213,030

Step-by-step explanation:

The preparation of the Cash Flows from Operating Activities - Indirect Method is presented below: -

Cash flow from Operating activities

Net income reported $178,690

Adjustment made:

Add : Depreciation expense $32,350

Add: Loss on the disposal of plant assets $4,690

Less: Increase in accounts receivable -$14,240

Add: Increase in accounts payable $15,590

Less: Increase in prepaid expenses -$4,050

Net Cash provided by operating activities $213,030