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Kennedy, Inc. reported the following data: Net income $179,562 Depreciation expense 15,511 Loss on disposal of...

Kennedy, Inc. reported the following data:

Net income $179,562
Depreciation expense 15,511
Loss on disposal of equipment 11,046
Gain on sale of building 21,801
Increase in accounts receivable 8,734
Decrease in accounts payable 3,109
Required:
Prepare the cash flows from operating activities section of the statement of cash flows using the indirect method. Refer to the list of Amount Descriptions for the exact wording of the answer choices for text entries. Use the minus sign to indicate cash outflows, cash payments, decreases in cash and for any adjustments, if required.

Solutions

Expert Solution

  • Requirement

Partial Statement of Cash Flows

for the year ending 31 Dec

Cash Flows from Operating activities

Net Income

$179,562

Adjustments to reconcile net income to

Net Cash provided by Operating activities

Depreciation expense

$15,511

Loss on Disposal of equipment

$11,046

Gain on sale of building

($21,801)

Increase in accounts receivables

($8,734)

Decrease in accounts payable

($3,109)

($7,087)

Net Cash provided from Operating activities

$172,475

  • Note

No.

Conceptual Notes

1

Cash Flow Statement reflects the Cash Inflows and Outflows during a period of time.

2

Effects of Non - Cash Transaction are adjusted from Net Income.

3

Depreciation Expense, Amortisation expenses are Added back to Net Income in Cash Flow Statement.

4

Decrease in Current Assets OR Increase in Current Liabilities are ADDED to Net Income

5

Increase in Current Assets OR Decrease in Current Liabilities are DEDUCTED from Net Income


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