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8 May, 06:09

Concord Corporation reported net income of $177,200 for 2017. Concord Corporation also reported depreciation expense of $35,230 and a loss of $4,920 on the disposal of plant assets. The comparative balance sheets show an increase in accounts receivable of $14,160 for the year, a $17,220 increase in accounts payable, and a $4,190 increase in prepaid expenses. Prepare the operating activities section of the statement of cash flows for 2017. Use the indirect method

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  1. 8 May, 07:49
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    Net income 177,200

    +35230 depreciation

    +4,920 loss on disposal

    217,350 adjusted net income (a)

    ↑↓

    ↑AR - 14,160

    ↑Prepaid - 4,190

    ↑AP 17,220

    Change in working Capital - 1,130 (b)

    Cash Flow generated from operating activities 216,220

    Explanation:

    (a) we must remove the non-monetary account from the income statement

    This means add the non-monetary expenses and losses

    Subtract the non monetary revenue and gains

    (b)

    The increase in assets account have a negative meaning, because it is assumed the company used cash to adquire it.

    Whiel increase in liabilities are positive, because the company receive aah or delay the payment of cash.
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