Journal Entries/Problems-Test #5 1.) The Income Statement of the Olivet Co. disc

Question

Journal Entries/Problems-Test #5 1.) The Income Statement of the Olivet Co. disclosed the following items for 2016: Depreciation Expense Gain on the sale of production equipment Net Income 57,600 33,600 $508,000 Balances of the Current Assets and Current Liability accounts changed between December 31, 2015 and December 31, 2016 as follows: Accounts Receivable Inventory Prepaid Insurance Accounts Payable Income Taxes Payable Dividends Payable 8960 -5120 -1920 -6080 1410 2200 Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method.

Explanation / Answer

Particulars Amt Net Proft as per Profit & loss Account 508000 Adjustment for Non cash effects Add: Depreciation 57600 Less: Gain on Sale of roduction Equipment 33600 Add: Increase in current Liability or Decrease in current assets Income Tax Payable 1410 Prepaid Insurance 1920 Inventory 5120 Less: Decrease in current Liability or Increase in current assets Account payable 6080 Increase in Trade Receivable 8960 Net Cash flow from Operating activities 525410

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