The following income statement and information about changes in noncash current

Question

The following income statement and information about changes in noncash current assets and current liabilities are reported. Assume all sale as credit sales, all purchases of inventory are on credit. SONAD COMPANY Income Statement For Year Ended December 31, 2016 Sales Cost of goods sold Gross profit $1,551,000 759,990 791,010 Salaries expense Depreciation expense Rent expense Amortization expenses-Patents Utilities expense $212,487 37,224 41,877 4,653 17,061313,302 477,708 6,204 Gain on sale of equipment Net income $ 483,912 Changes in current asset and current liability accounts for the year that relate to operations follow. Accounts receivable S 34,700 increase Accounts payable 19,725 increaseSalaries payable $13,675 decrease 5,800 decrease Use the direct method to prepare only the cash provided or used by operating activities section of the statement of cash flows for this company. (Amounts to be deducted should be indicated with a minus sign.) Statement of Cash Flows (Partial) Cash flows from operating activities

Explanation / Answer

Cash flow from operating activity :

S

Cash flow from operating activities Net income 483912 Adjustment to reconcile net income Depreciation expenses 37224 Amortization expenses 4653 Gain on sale of equipment (6204) Account receivable increase (34700) Inventory increase (19725) Account payable decrease (13675) Salary payable decrease (5800) Net cash flow from operating activities 445685

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