Cosi Company reported net income of $190,000 for 2014. Cosi also reported deprec
ID: 2461918 • Letter: C
Question
Cosi Company reported net income of $190,000 for 2014. Cosi also reported depreciation expense of $35,000 and a loss of $5,000 on the disposal of plant assets. The comparative balance sheet shows an increase in accounts receivable of $15,000 for the year, a $17,000 increase in accounts payable, and a $4,000 increase in prepaid expenses. Prepare the operating activities section of the statement of cash flows for 2014. Use 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
Net income $190,000 Increase in Accounts Receivables $15,000 Increase in Prepaid Expenses $4,000 Total Increase $19,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization $35,000 Losses on Assets $5,000 Increase payable $17,000 Total adjustments $57,000 Net cash provided by operating activities $228,000