The following income statement and information about changes

The following income statement and information about changes in noncash current assets and current liabilities are reported.

SONAD COMPANY
Income Statement
For Year Ended December 31, 2017

Sales

$

1,515,000

Cost of goods sold

742,350

Gross profit

772,650

Operating expenses

Salaries expense

$

207,555

Depreciation expense

36,360

Rent expense

40,905

Amortization expenses–Patents

4,545

Utilities expense

16,665

306,030

466,620

Gain on sale of equipment

6,060

Net income

$

472,680

Changes in current asset and current liability accounts for the year that relate to operations follow.

Accounts receivable

$

44,400

increase

Accounts payable

$

9,125

decrease

Inventory

25,325

increase

Salaries payable

4,050

decrease

Required:

Prepare only the cash flows from operating activities section of the statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)

SONAD COMPANY Income Statement For Year Ended December 31, 2017
Sales				$	1,515,000
Cost of goods sold					742,350
Gross profit					772,650
Operating expenses
Salaries expense	$	207,555
Depreciation expense		36,360
Rent expense		40,905
Amortization expenses–Patents		4,545
Utilities expense		16,665			306,030
					466,620
Gain on sale of equipment					6,060
Net income				$	472,680

Solution

SONAD COMPANY

Statement of Cash Flows

For Year Ended December 31, 2017

Cash flows from operating activities;

Net Income

$472,680

Adjustments to reconcile net income to net cash provided by operating activities

Add : Depreciation Expenses

36,360

Add : Amortization expense—Patents      

4,545

Less : Gain on sale of equipment     

(6,060)

Changes in current operating assets and liabilities         

Less :   Increase in accounts receivable        

(44,400)

Less :   Increase in inventory    

(25,325)

Less : Decrease in accounts payable

(9,125)

Less : Decrease in salaries payable   

(4,050)

(48,055)

Net cash provided by operating activities

424,625

SONAD COMPANY
Statement of Cash Flows
For Year Ended December 31, 2017
Cash flows from operating activities;
Net Income		$472,680
Adjustments to reconcile net income to net cash provided by operating activities
Add : Depreciation Expenses	36,360
Add : Amortization expense—Patents	4,545
Less : Gain on sale of equipment	(6,060)
Changes in current operating assets and liabilities
Less :   Increase in accounts receivable	(44,400)
Less :   Increase in inventory	(25,325)
Less : Decrease in accounts payable	(9,125)
Less : Decrease in salaries payable	(4,050)	(48,055)
Net cash provided by operating activities		424,625