Question

  

Sowell Company Partial Balance Sheets as of December 31
Assets	2016	2015
Cash	$40,000	$20,000
Accounts receivable	70,000	85,000
Inventory	40,000	35,000
Liabilities
Accounts payable	$54,000	$62,000

Additional information for 2016:
Net income was $88,000.
Depreciation expense was $19,000.

Required: Prepare the operating activities section of the statement of cash flows for 2016 using the indirect method.

Cash flows from operating activities:
Net income
Adjustment for noncash effects:
Depreciation expense
Decrease in accounts receivable
Increase in inventory
Decrease in accounts payable
Net cash flows from operating activities	$109,000

The correct answer should be $109,000

Answer 1

Answer-

SOWELL COMPANY
STATEMENT OF CASH FLOWS PARTIAL (USING INDIRECT METHOD)
FOR THE YEAR ENDED DECEMBER 31,2016
Particulars		Amount
		$
Cash flow from operating activities
Net Income		88000
Adjustments to reconcile net income to net cash provided by operating activities
Adjustment for non cash effects
Depreciation		19000
Change in operating assets & liabilities
Decrease in accounts receivable		15000
Increase in inventory		-5000
Decrease in accounts payable		-8000
Net cash flow from operating activities		109000