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Demers Inc. reported the following data:
Net income $490,000
Depreciation expense 52,000
Gain on disposal of equipment 26,500
Decrease in accounts receivable 32,400
Decrease in accounts payable 12,350
Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Use the minus sign to indicate cash outflows, cash payments, decreases in cash and for any adjustments, if required.

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Answer:

Cash Flows from Operating Activities  is 555.050

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 490.000

Adjustment to reconcile the net income to cash  

+ Depreciation expense 52.000

- Gain on disposal of equipment (7.000)

+ Decrease in accounts receivable  32.400

- Decrease in accounts payable (12.350)

Net cash 555.050

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