Determining Net Income from Net Cash Flow from Operating Activities Sanhueza, In

Question

Determining Net Income from Net Cash Flow from Operating Activities Sanhueza, Inc., reported a net cash flow from operating activities of $142,700 on its statement of cash flows for the year ended December 31, 2016. The following Information was reported in the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method: Decrease in income taxes payable $2,600 Decrease in inventories 6,500 Depreciation 10,000 Gain on sale of investments 4,500 Increase in accounts payable 1,800 Increase in prepaid expenses 1,100 Increase in accounts receivable 4,900 Determine the net income reported by Sanhueza, Inc., for the year ended December 31, 2016.

Explanation / Answer

Cash flow from operating activities $142,700 Add Decrease in income tax payable $2,600 Gain on sale of investment $4,500 Increase in prepaid expense $1,100 Increase in accounts receivable $4,900 Less Decrease in inventories ($6,500) Depreciation ($10,000) Increase in accounts payable ($1,800) Net income $137,500

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