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The Club, Inc. (TCI) presents its statement of cash flows using the indirect method. For the current year the Company reported net income of $212,000. All sales are on account and the balance in the Accounts Receivable account increased by $14,000. The balance in the unearned revenue account decreased by $13,000. Also, the company reported depreciation expense of $35,000 and a gain on the sale of equipment of $16,000. Based on this information alone, the amount of the cash flow from operating activities shown on statement of cash flows is

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Answer:

the amount of the cash flow from operating activities shown on statement of cash flows is 204.000

Explanation:

The indirect method involves the adjustment of net income with changes in balance sheet accounts to arrive at the amount of cash generated by operating activities.

It depends on the account if it is added or subtracted to net income. Below you will find the added account with a plus (+) and the subtracted ones with a minus (-)

Notice the amounts of any decreases are in parentheses.

Net income 212.000,00

Adjustment to reconcile the net income to cash

 

- Increase in accounts receivable (14.000,00)

- Decrease in current liabilities  (13.000,00)

+ Depreciation expense 35.000,00

- Gain on sale of equipment (16.000,00)

 

Net cash 204.000

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