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Cheyenne Corp. reported net income of $196,100 for 2022. Cheyenne also reported depreciation expense of $47,400 and a loss of $5,600 on the disposal of plant assets. The comparative balance sheets show an increase in accounts receivable of $10,900 for the year, a $12,900 increase in accounts payable, and a $3,200 increase in prepaid expenses. Prepare the operating activities section of the statement of cash flows for 2022. Use the indirect method

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Solution:

                     Particulars                                                              Amount

           Net Operating Income                                                  $ 196,100

Adjustments to reconcile the net to :

Net Cash provided by the operating activities.

Add the depreciation expenses                               $ 47,400

Add loss on disposal of plant assets                       $ 5,600

Add increase in the accounts receivable                $ 10,900

Add increase in Accounts payable                          $ 12,900

Add increases in prepaid expenses                       $ 3,200  

                                                                                   $ 80,000

Cash balance at the end                                                             $ 276,100                                                                                                    

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