Blue Spruce Corp. reported net income of $194,740 for 2022. Blue Spruce Corp. also reported depreciation expense of $36,900 and a loss of $5,030 on the disposal of plant assets. The comparative balance sheets show an increase in accounts receivable of $15,650 for the year, a $15,880 increase in accounts payable, and a $4,250 increase in prepaid expenses. Prepare the operating activities section of the statement of cash flows for 2022. Use the indirect method.

Question

Jazlene Villarreal

Business

6 October, 08:14

Blue Spruce Corp. reported net income of $194,740 for 2022. Blue Spruce Corp. also reported depreciation expense of $36,900 and a loss of $5,030 on the disposal of plant assets. The comparative balance sheets show an increase in accounts receivable of $15,650 for the year, a $15,880 increase in accounts payable, and a $4,250 increase in prepaid expenses. Prepare the operating activities section of the statement of cash flows for 2022. Use the indirect method.

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Addison Juarez · Answer 1

The preparation of the Cash Flows from Operating Activities-Indirect Method is shown below:

Cash flow from Operating activities - Indirect method

Net income $194,740

Adjustment made:

Add : Depreciation expense $36,900

Add: Loss on disposal of plant assets $5,030

Less: Increase in accounts receivable - $15,650

Add: Increase in accounts payable $15,880

Less: Increase in prepaid expense - $4,250

Total of Adjustments $37,910

Net Cash flow from Operating activities $232,650