Question

Software Distributors reports net income of $48,000. Included in that number is depreciation expense of $6,500 and a loss on the sale of land of $4,300. A comparison of this year's and last year's balance sheets reveals a decrease in accounts receivable of $18,000, a decrease in inventory of $11,500, and an increase in accounts payable of $38,000.

Required:Prepare the operating activities section of the statement of cash flows using the indirect method.

Answer 1

Net cash from operating activities is $126,300.

Step-by-step explanation:

Statement of cash flows

(Operating activities section only)

Details $

Net income 48,000

Adjustment to reconcile net income:

Depreciation expense 6,500

Loss on the sale of land 4,300

(Increase) decrease in current assets:

Decrease in accounts receivable 18,000

Decrease in inventory 11,500

Increase (decrease) in current liabilities:

Increase in accounts payable 38,000

Net cash from operating activities 126,300