Exercise 16-4 Indirect: Cash flows from operating activities LO P2

The following income statement and information about changes in noncash current assets and current liabilities are reported.

SONAD COMPANY Income Statement For Year Ended December 31, 2017

Sales		$1,627,000
Cost of goods sold		797,230
Gross profit		829,770
Operating expenses
Salaries expense	$222,899
Depreciation expense	39,048
Rent expense	43,929
Amortization expensesPatents	4,881
Utilities expense	17,897	328,654
		501,116
Gain on sale of equipment		6,508
Net income		$507,624

Changes in current asset and current liability accounts for the year that relate to operations follow.

Accounts receivable	$38,700	increase	Accounts payable	$13,875	decrease
Inventory	35,200	increase	Salaries payable	3,400	decrease

Required:

Prepare only the cash flows from 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 Net income $ 507,624 Adjustments to reconcile net income to net cash provided by operating activities Income statement items not affecting cash Amortization expense-Patents Gain on sale of equipment Depreciation expense Changes in current operating assets and liabilities Increase in accounts receivable Increase in inventory Decrease in accounts payable $ 507,624