value 16.66 points Exercise 12-4 Indirect: Cash flow from operations LO P2 Salud

Question

value 16.66 points Exercise 12-4 Indirect: Cash flow from operations LO P2 Salud Company reports net income of $400,000 for the year ended December 31, 2013. It also reports $80,000 depreciation expense and a $20,000 gain on the sale of machinery. Its comparative balance sheets reveal a $40,000 increase in accounts receivable, $6,000 increase in accounts payable, $12,000 decrease in prepaid expenses, and $2,000 decrease in wages payable. Required: Prepare only the operating activities section of the statement of cash flows for 2013 using the indirect method. (Amounts to be deducted should be indicated with a minus sign.) Cash flows from operating activities Adjustments to reconcile net income to operating cash flow References eBook &Resources; esc F1 F2 FS

Explanation / Answer

Cash flow indirect method Cash flow from operating activities Net income 400000 Adjustments to reconcile the net income Gain on the sale of machinery -20000 Depreciation expense 80000 Changes in current asset and liabilities Increase in accounts receivable -40000 decrease in prepaid expense 12000 Increase in accounts payable 6000 Decrease in wages payable -2000 36000 Cash flow from operating activities 436000

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