Exercise 12-4 Indirect: Cash flows from operating activities LO P2

The following income statement and additional year-end information is provided.

SONAD COMPANY Income Statement For Year Ended December 31
Sales				$	2,329,000
Cost of goods sold					1,141,210
Gross profit					1,187,790
Operating expenses
Salaries expense	$	319,073
Depreciation expense		55,896
Rent expense		62,883
Amortization expensesPatents		6,987
Utilities expense		25,619			470,458
					717,332
Gain on sale of equipment					9,316
Net income				$	726,648

Accounts receivable	$	32,300		increase		Accounts payable	$	13,625		decrease
Inventory		11,475		increase		Salaries payable		5,700		decrease

Prepare the operating activities section of the statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)

Answer is complete but not entirely correct. Statement of Cash Flows (partial) Cash flows from operating activities Net income $ 726,648 Adjustments to reconcile net income to net cash provided by operating activities Income statement items not affecting cash Depreciation expense 55,896 Amortization expense Patents 6,987 Gain on sale of equipment 9,316 X Changes in current operating assets and liabilities Increase in accounts receivable Increase in inventory Decrease in accounts payable Decrease in salaries payable 32,300 X 11,475 X 13,625 X 5,700 X Net cash provided by operating activities $ 861,947