# Cash flows from operating activitiesâ€”indirect method Staley Inc. reported the following data: Net income \$280,000 Depreciation expense 48,000 Loss on disposal of equipment 19,520 Increase in accounts receivable 17,280 Increase in accounts payable 8,960 Prepare the Cash flows from operating activities section of the statement of cash flows, using the indirect method.

### Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

### Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

#### Solutions

Chapter
Section
Chapter 16, Problem 16.4BPE
Textbook Problem

## Cash flows from operating activities—indirect methodStaley Inc. reported the following data: Net income \$280,000 Depreciation expense 48,000 Loss on disposal of equipment 19,520 Increase in accounts receivable 17,280 Increase in accounts payable 8,960 Prepare the Cash flows from operating activities section of the statement of cash flows, using the indirect method.

Expert Solution
To determine

Statement of cash flows: It is one of the financial statement that shows the cash and cash equivalents of a company for a particular period. It determines the net changes in cash through reporting the sources and uses of cash due to the operating, investing, and financing activities of a company.

Indirect method: Under this method, the following amounts are to be adjusted from the Net Incometo calculate the net cash provided from operating activities.

Cash flows from operating activities: These are the cash produced by the normal business operations.

The below table shows the way of calculation of cash flows from operating activities:

 Cash flows from operating activities (Indirect method) Add: Decrease in current assets Increase in current liability Depreciation expense and amortization expense Loss on sale of plant assets Deduct: Increase in current assets Decrease in current liabilities Gain on sale of plant assets Net cash provided from or used by operating activities

Table (1)

To Prepare: The cash flows from operating activities sections of the statement of cash flows using indirect method.

### Explanation of Solution

 S Incorporation Statement of Cash Flows - Indirect Method (Partial) Details Amount (\$) Amount (\$) Cash flows from operating activities: Net income 280,000 Adjustments to reconcile net income to net cash flow from operating activities: ...

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