The income statement disclosed the follwoing items for 2013: Depreciation expens

ID: 2389318 • Letter: T

Question

The income statement disclosed the follwoing items for 2013:
Depreciation expense $21,600
Gain on disposal of equipment $12,600
Net Income $190,500

Balances of the current assets and liability accounts changed between December 31,2012, and December 31,2013, as follows:
Accounts Receivable $3,360
Inventory $1,920*
Prepaid insurance $ 720*
Accounts Payable $2,280*
Income taxes payable $ 720
Dividends payable $ 510

*Decrease

Prepare the Cash Flows from operating activities section of the statement of cash flows, using the indirect method.

Explanation / Answer

Net income

190,500

Adjustments to net income

Depreciation

21,600

Gain on disposal

(12,600)

Increase in AR

(3,360)

Decrease in inventory

1,920

Decrease in prepaid ins

720

Decrease in AP

(2,280)

Increase in tax payable

720

Cash from operating activities

197,220