Question

Demers Inc. reported the following data:

Particulars	Amount$
Net income	490,000
Depreciation expense	52,000
Gain on Disposal of equipment	26,500
Decrease in accounts receivable	32,400
Decrease in accounts payable	12,350

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

Answer 1

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