Question

Sheridan Company reported net income of $178,690 for 2022. Sheridan Company also reported depreciation expense of $32,350 and a loss of $4,690 on the disposal of plant assets. The comparative balance sheets show an increase in accounts receivable of $14,240 for the year, a $15,590 increase in accounts payable, and a $4,050 increase in prepaid expenses. Prepare the operating activities section of the statement of cash flows for 2022. 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).)

Answer 1

Answer:

Sheridan Company

The operating activities section of the Statement of Cash Flows for the year ended December 31, 2022:

Adjusted cash from operations             $215,730

Accounts Receivable                                 (14,240)

Accounts Payable                                       15,590

Prepaid Expenses                                       (4,050)

Net net cash from operating activities $213,030

Explanation:

a) Data and Calculations:

Net income for 2022 = $178,690

add non-cash expenses:

Depreciation expense     32,350

Loss on plant disposal      4,690

Adjusted cash              $215,730

b) The Operating Activities section of the Statement of Cash Flows is one of the three main sections of the Statement of Cash Flows.  It summarizes operating activities or the main activities of Sheridan Company.  The other activities are the investing and financing activities section, which deal with Sheridan's purchase and sale of investments in long-term assets and the sources and uses of funds respectively.