Answer to Question #243518 in Accounting for Another you

Question

A. Prepare the cash flow from operating activities of Foxtrot Company using the indirect method.
a. Net Income - 400,000
b. Proceeds from sale of equipment - 16,000
c. Decrease in accounts receivable - 20,000
d. Gain on sale of equipment - 10,000
e. Depreciation expense - 60,000

Answer 1

Solution:

Cash flow from operating activities using the indirect method is as follows:

Net Income                                         = 400,000

Add: Depreciation expense                 =   60,000

Less: Gain on sale of equipment        = (10,000)

Add: Decrease in accounts receivable = 20,000

Cash flow from operations =               470,000