Exercise 23-6 Crane Company\'s income statement for the year ended December 31,

Question

Exercise 23-6 Crane Company's income statement for the year ended December 31, 2017, contained the following condensed information Service revenue Operating expenses (excluding depreciation) Depreciation expense Loss on sale of equipment Income before income taxes Income tax expense Net income $845,000 621,000 59,000 26,000 706,000 139,000 40,000 $99,000 Crane's balance sheet contained the following comparative data at December 31 2017 2016 Accounts receivable Accounts payable Income taxes payable $35,000 39,000 4,100 $53,000 30,000 8,400 (Accounts payable pertains 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

Solution:

Crane Company Statement of Cash Flows (Partial) - Indirect Method For year ended December 31, 2017 Particulars Details Amount Cash Flow from Operating Activities: Net Income $99,000.00 Adjustments to reconcile net income to net cash provided by operations: Depreciation Expense $59,000.00 Loss on sale of equipment $26,000.00 Decrease in accounts receivables ($53,000 - $35,000) $18,000.00 Increase in accounts payable ($39,000 - $30,000) $9,000.00 Decrease in Income tax payable ($8,400 - $4,100) -$4,300.00 Total Adjustments to reconcile net income to net cash provided by operations: $107,700.00 Net Cash provided by operating activities $206,700.00

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