Question

Novak Corp. reported net income of $178,150 for 2022. Novak Corp. also reported depreciation expense of $36,430 and a loss of $5,190 on the disposal of plant assets. The comparative balance sheets show an increase in accounts receivable of $16,500 for the year, a $18,040 increase in accounts payable, and a $3,970 increase in prepaid expenses. Prepare the operating activities section of the statement of cash flows for 2022. Use the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Answer 1

Answer:

Explanation:

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

Cash flow from Operating activities - Indirect method

Net income $178,150

Adjustment made:

Add : Depreciation expense $36,430

Add: Loss on disposal of plant assets $5,190

Less: Increase in accounts receivable -$16,500

Less: Increase in prepaid expense -$3,970

Add: Increase in accounts payable $18,040

Total of Adjustments $39,190

Net Cash flow from Operating activities                $217,340