Question

Zumbrunn Company’s income statement contained the following condensed information.

ZUMBRUNN COMPANY Income Statement For the Year Ended December 31, 2020
Service revenue				$970,400
Operating expenses, excluding depreciation		$624,100
Depreciation expense		55,400
Loss on disposal of plant assets		25,200		704,700
Income before income taxes				265,700
Income tax expense				39,100
Net income				$226,600

Zumbrunn’s balance sheets contained the comparative data at December 31, shown below.

		2020		2019
Accounts receivable		$75,200		$59,800
Accounts payable		40,400		28,900
Income taxes payable		13,000		6,400

Accounts payable pertain to operating expenses.

Prepare the operating activities section of the statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

ZUMBRUNN COMPANY Partial Statement of Cash Flows choose the accounting period                                                          For the Year Ended December 31, 2020For the Month Ended December 31, 2020December 31, 2020
select an opening section name                                                          Cash at Beginning of PeriodCash at End of PeriodCash Flows from Financing ActivitiesCash Flows from Investing ActivitiesCash Flows from Operating ActivitiesNet Cash Provided by Financing ActivitiesNet Cash Provided by Investing ActivitiesNet Cash Provided by Operating ActivitiesNet Cash Used by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet Decrease in CashNet Increase in Cash
select an item                                                          Net IncomeDepreciation ExpenseLoss on Disposal of Plant AssetsIncrease in Accounts PayableDecrease in Accounts PayableIncrease in Income Taxes PayableDecrease in Income Taxes PayableIncrease in Accounts ReceivableDecrease in Accounts ReceivableCash Receipts from CustomersFor Operating ExpensesFor Income Taxes		$enter a dollar amount
Adjustments to reconcile net income to
select a subsection name                                                          Cash at Beginning of PeriodCash at End of PeriodCash Flows from Financing ActivitiesCash Flows from Investing ActivitiesCash Flows from Operating ActivitiesNet Cash Provided by Financing ActivitiesNet Cash Provided by Investing ActivitiesNet Cash Provided by Operating ActivitiesNet Cash Used by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet Decrease in CashNet Increase in Cash
select an item                                                          Net IncomeDepreciation ExpenseLoss on Disposal of Plant AssetsIncrease in Accounts PayableDecrease in Accounts PayableIncrease in Income Taxes PayableDecrease in Income Taxes PayableIncrease in Accounts ReceivableDecrease in Accounts ReceivableCash Receipts from CustomersFor Operating ExpensesFor Income Taxes	$enter a dollar amount
select an item                                                          Net IncomeDepreciation ExpenseLoss on Disposal of Plant AssetsIncrease in Accounts PayableDecrease in Accounts PayableIncrease in Income Taxes PayableDecrease in Income Taxes PayableIncrease in Accounts ReceivableDecrease in Accounts ReceivableCash Receipts from CustomersFor Operating ExpensesFor Income Taxes	enter a dollar amount
select an item                                                          Net IncomeDepreciation ExpenseLoss on Disposal of Plant AssetsIncrease in Accounts PayableDecrease in Accounts PayableIncrease in Income Taxes PayableDecrease in Income Taxes PayableIncrease in Accounts ReceivableDecrease in Accounts ReceivableCash Receipts from CustomersFor Operating ExpensesFor Income Taxes	enter a dollar amount
select an item                                                          Net IncomeDepreciation ExpenseLoss on Disposal of Plant AssetsIncrease in Accounts PayableDecrease in Accounts PayableIncrease in Income Taxes PayableDecrease in Income Taxes PayableIncrease in Accounts ReceivableDecrease in Accounts ReceivableCash Receipts from CustomersFor Operating ExpensesFor Income Taxes	enter a dollar amount
select an item                                                          Net IncomeDepreciation ExpenseLoss on Disposal of Plant AssetsIncrease in Accounts PayableDecrease in Accounts PayableIncrease in Income Taxes PayableDecrease in Income Taxes PayableIncrease in Accounts ReceivableDecrease in Accounts ReceivableCash Receipts from CustomersFor Operating ExpensesFor Income Taxes	enter a dollar amount
		enter a subtotal of the adjustments
select a closing section name                                                          Cash at Beginning of PeriodCash at End of PeriodCash Flows from Financing ActivitiesCash Flows from Investing ActivitiesCash Flows from Operating ActivitiesNet Cash Provided by Financing ActivitiesNet Cash Provided by Investing ActivitiesNet Cash Provided by Operating ActivitiesNet Cash Used by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet Decrease in CashNet Increase in Cash		$enter a total amount for the section

Answer 1

Answer -

Zumbrunn Company
Partial Statement of Cash flow
For the Year Ended December 31 2020
Cash flow from operating activities:
Net income		$226600
Adjustments to reconcile net income to
Net cash provided by operating activities:
Depreciation expense	$55400
Loss on disposal of plant assets	$25200
Increase in accounts receivable	($15400)
Increase in accounts payable	$11500
Increase in income taxes payable	$6600
		$83300
Net cash provided by operating activities		$309900

Calculation:

1. Increase in accounts receivable:

= 2020 accounts receivable balance - 2019 accounts receivable balance

= $75200 - $59800

= $15400

2. Increase in accounts payable:

= 2020 accounts payable balance - 2019 accounts payable balance

= $40400 - $28900

= $11500

3. Increase in income taxes payable:

= 2020 income taxes payable balance - 2019 income taxes payable balance

= $13000 - $6400

= $6600