Garton Company had net income of $195000 in 2016. Depreciation expense for the year is $50000. During the year Accounts Receivable increased $8000 and Prepaid Expenses decreased $1000. The company also sold equipment at a loss of $3000.
Instructions
Calculate net cash flows from operating activities using the indirect method.

Question

Niquayi Massard · Accepted Answer

Final Answer :   Net Income  $ 195 , 000  Add:   Depreciation  50 , 000  Loss on sale of equipment  3 , 000  Decrease in Prepaid Expenses  1 , 000  Deduct Increase in Accounts Receivable  ( 8 , 000 )  Net cash flows from operating activities  $ 241 , 000 \begin{array}{lr}	ext { Net Income }  &  \$ 195,000 \	ext { Add: } \quad 	ext { Depreciation }  &  50,000 \\quad 	ext { Loss on sale of equipment }  &  3,000 \\quad 	ext { Decrease in Prepaid Expenses }  &  1,000 \	ext { Deduct Increase in Accounts Receivable }  &  (8,000) \	ext { Net cash flows from operating activities }  &  \$ 241,000\end{array}  Net Income   Add:   Depreciation   Loss on sale of equipment   Decrease in Prepaid Expenses   Deduct Increase in Accounts Receivable   Net cash flows from operating activities  ​ $195 , 000 50 , 000 3 , 000 1 , 000 ( 8 , 000 ) $241 , 000 ​

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