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 $1,619,000 793,310 Sales Cost of goods sold Gross profit Operating expenses Salaries expense Depreciation expense Rent expense Amortization expenses-Patents Utilities expense 825,690 $221,803 38,856 43,713 4,857 17,809 327,038 498,652 6,476 $ 505,128 Gain on sale of equipment Net income $11,600 decrease 2,400 decrease $19,450 increase 22,625 increase Accounts payable Salaries payable Accounts receivable Inventory 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.) Statement of Cash Flows (partial) Cash flows from operating activities 505,128 Net income $ Adjustments to reconcile net income to net cash provided by operating activities Income statement items not affecting cash 38,856 Depreciation expense 4,857 Amortization expense-Patents Gain on sale of equipment Changes in current operating assets and liabilities Increase in accounts receivable Increase in inventory Decrease in accounts payable Decrease in salaries payable 548,841