Question

Oriole Company reported net income of $189,230 for 2022. Oriole Company also reported depreciation expense of $38,350 and a loss of $4,720 on the disposal of plant assets. The comparative balance sheets show an increase in accounts receivable of $14,800 for the year, a $16,380 increase in accounts payable, and a $4,140 increase in prepaid expenses. Prepare the operating activities section of the statement of cash flows for 2022. Use the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Answer 1

Answer and Explanation:

The preparation of the operating activities section of the statement of cash flows for 2022 is presented below:

Cash flow from operating activities

Net income reported $189,230

Add: Depreciation expense $38,350

Add: Loss on disposal of plant asset $4,720

Less: increase in accounts receivable of -$14,800

Add: increase in accounts payable $16,380

Less: increase in prepaid expenses -$4,140

Cash flow provided by operating activities $229,740

The positive amount reflects the cash inflow and the negative amount reflects the cash outflow