Question

The following income statement and additional year-end information is provided. SONAD COMPANY Income Statement For Year Ended December 31 Sales $ 1,805,000 Cost of goods sold 884,450 Gross profit 920,550 Operating expenses Salaries expense $ 247,285 Depreciation expense 43,320 Rent expense 48,735 Amortization expenses—Patents 5,415 Utilities expense 19,855 364,610 555,940 Gain on sale of equipment 7,220 Net income $ 563,160 Accounts receivable $ 15,100 increase Accounts payable $ 10,275 decrease Inventory 37,925 increase Salaries payable 3,050 decrease Prepare the operating activities section of the statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)

Answer 1

$538,325

Step-by-step explanation:

The computation is shown below:

Cash flow from Operating activities - Indirect method

Net income $563,160

Add : Depreciation expense $43,320

Add: Amortization expenses - Patents 5,415

Less: Gain on sale of equipment -$7,220

Less: Increase in account receivable - $15,100

Less: Decrease in account payable -$102,75

Less: Increase in inventory -$37,925

Less: Decrease in salaries payable -$3,050

Net Cash flow from Operating activities $538,325

The negative amount shows the cash outflow while the positive amount shows the cash inflow