Question

Exercise 13-4 Gutierrez Company reported net income of $194,700 for 2017. Gutierrez also reported depreciation expense of $47,700 and a loss of $4,900 on disposal of equipment. The comparative balance sheet shows an decrease in accounts receivable of $19,900 for the year, a $21,900 increase in accounts payable, and a $3,200 decrease in prepaid expenses Prepare the operating activities section of the statement of cash flows for 2017. 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). GUTIERREZ COMPANY Partial Statement of Cash Flows Adjustments to reconcile net income to Click if you would like to Show Work for this question: Qpen Show Work

Answer 1

Requirement

Partial Statement of Cash Flows
for the year ended 31 Dec 2017
Cash flows from Operating Activities
Net Income		$194,700
Adjustments to reconcile Net Income to
Net Cash provided by Operating activities
Depreciation Expense	$47,700
Loss on Disposal of Equipment	$4,900
Decrease in Accounts receivables	$19,900
Increase in accounts payables	$21,900
Decrease in Prepaid expenses	$3,200
		$97,600
Net Cash provided by Operating activities		$292,300

No.	Conceptual Notes
1	Cash Flow Statement reflects the Cash Inflows and Outflows during a period of time.
2	Effects of Non - Cash Transaction are adjusted from Net Income.
3	Depreciation Expense, Amortisation expenses are Added back to Net Income in Cash Flow Statement.
4	Decrease in Current Assets OR Increase in Current Liabilities are ADDED to Net Income
5	Increase in Current Assets OR Decrease in Current Liabilities are DEDUCTED from Net Income