Question

In: Accounting

Prepare the Cash flows from operating activities section of the statement of cash flows, using the indirect method.

Demers Inc. reported the following data:

ParticularsAmount$
Net income490,000
Depreciation expense52,000
Gain on Disposal of equipment26,500
Decrease in accounts receivable32,400
Decrease in accounts payable12,350

Prepare the cash flows from operating activities section of the statement of cash flows using the indirect method

Solutions

Expert Solution

Statement of cash flows : It is a financial statement that indicates a company's cash and cash equivalents for a specific time. It computes the net changes in cash by reporting the sources and uses of cash resulting from a company's operating, investing, and financing activities.

Demers Inc

Statement of cash flows - Indirect method (Partial)

Particulars Amount$ Amount$
Cash flows from operating activities     
Net income   490,000
Adjustments to reconcile net income to net cash from operating activities :    
Add : Depreciation expense 52,000  
Gain on Diposal of equipment (26,500)  
Changes in current operating assets and liabilities:    
Decrease in accounts receivable 32,400  
Decrease in accounts payable (12,350) 45,550
Net cash provided by operating activities    $535,550

Therefore, net cash provided by operating activities under indirect method is $535,550

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