Partial balance sheets and additional information are listed below for Sowell Co

Question

Partial balance sheets and additional information are listed below for Sowell Company.

  
Additional information for 2018:

Net income was $96,000.
Depreciation expense was $23,000.

Required:
Prepare the operating activities section of the statement of cash flows for 2018 using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)
  

  

Sowell Company Partial Balance Sheets as of December 31 2018 2017 Assets Cash $ 48,000 $ 27,200 Accounts receivable 77,200 93,000 Inventory 48,000 42,200 Liabilities Accounts payable $ 61,200 $ 70,000

Explanation / Answer

Prepare the operating activities section of the statement of cash flows for 2018 using the indirect method.

Net income 96000 Adjustment to reconcile net income to cash flow from operating activities Depreciation expense 23000 Decrease account receivable 15800 Increase inventory -5800 Decrease account payable -8800 Net cash flow from operating activities 120200

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