Washington Company\'s comparative balance sheets for December 31 of 2017 and 201

Question

Washington Company's comparative balance sheets for December 31 of 2017 and 2016 are shown below Assets Dec 31, 2017 Dec 31, 2016 IncreaseDecrease Cash Accounts Rceivable (net) Inventory Prepaid Expenses Plant Assets S 107,600 $47,000$ 60,600 1,200 3,000 10,900 33,500 5,900 81,000 9,700 30,500 7,500 S 1,600 68.00013.000 30,800) (22,300) 8,500 Total Assets $ 208,100S140,400 Liabilities and Stockholders' Equity 2,600 S14,200 16,800 2,100 3,500 Accounts Payable Wages Payable Income Tax Payable Bonds Payable Common Stock, $10 par Additional Paid-in Capital Retained Earnings Treasury Stock 5,700 2,200 3,600 1,300 52,000 52,000 66,000 45,000 26,000 (3,000) 56.00010.000 30,00015,000 32,000 6,000 3,000 Total Liabilities and Stockholders' Equity $ 208,100 140,400 The following information is taken from Washington's financial records . During 2017, equipment was sold for $26,500. The equipment had an original cost of $35,000 and a current book value of $29,000 .1,000 shares of common stock were issued for $25 per share Depreciation expense for 2017 was $14,500 . Net income for the year was $11,000 Required: Prepare the operating activities section of the for Washington Company, indirect method. Assume that all accounts payable relate to purchases of inventory

Explanation / Answer

Answer:-

For the year ended December 2017 Particulars Amount $ Cash flow from opreating activities Case A Net Income 11000 Adjustments to reconcile net income to net cash provided by opreating activities Adjustment for non cash effects Depreciation 14500 Loss on sale of equipment 2500 Change in opreating assets & liabilities Increase in accounts receivable -1200 Increase in inventory -3000 Decrease in prepaid expenses 1600 Decrease in accounts payable -2600 Increase in wages payable 3600 Decrease in income tax payable -1300 Net cash flow from opreating activities (a) 25100

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