Rattigan Company\'s income statement contained the condensed information below R

Question

Rattigan Company's income statement contained the condensed information below Rattigan Company Income Statement For the Year Ended December 31, 2014 $970,000 Service revenue Operating expenses, excluding depreciation Depreciation expense Loss on disposal of plant assets Income before income taxes Income tax expense Net income $624,000 55,000 25,000 704,000 266,000 40,000 $226,000 Rattigan's balance sheet contained the comparative data at December 31, shown below 2014 2013 Accounts receivable Accounts payable Income taxes payable $75,000 41,000 13,000 $60,000 27,000 7,000 Accounts payable pertain to operating expenses. Prepare the operating activities section of the statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g -15,000 or in parenthesis e.g. (15,000).)

Explanation / Answer

cash flow from operating activity Net income 226000 Adjustment to reconcile net income to Depreciation 55000 loss on disposal of asset 25000 Increase in receivables   (75000 -60000) -15000 Increase in payables   (41000 - 27000) 14000 Increase in income tax payable   (13000-7000) 6000 85000 cash flow from operating activity 311000

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