Splish Brothers Inc. reported net income of $194,800 for 2022. Splish Brothers also reported depreciation expense of $47,700 and a loss of $5,900 on the disposal of plant assets. The comparative balance sheets show an increase in accounts receivable of $16,700 for the year, a $18,700 increase in accounts payable, and a $3,000 increase in prepaid expenses. Prepare the operating activities section of the statement of cash flows for 2022. Use the indirect method.

Operating activities section of the statement of cash flows for 2022

Net Income                                                          $194,800

Adjustment for non cash items :

Depreciation                                                         $47,700

Loss on disposal                                                    $5,900

Adjustments for changes in working capital :

Increase in accounts receivable                        ($16,700)

Increase in accounts payable                              $3,000

Net Cash Provided by Operating Activities     $234,700

Explanation:

Operating activities section of the statement of cash flows reconciles the Net Income to Operating Cashflow when the indirect method is used as shown above.

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