Staley Inc. reported the following data:

Question

Line Item Description Amount
Net income $214,500
Depreciation expense 50,600
Loss on disposal of equipment 38,500
Increase in accounts receivable 29,700
Increase in accounts payable 11,400

Prepare the "Cash flows from (used for) operating activities" section of the statement of cash flows, using the indirect method. Use the minus sign to indicate cash out flows, cash payments, decreases in cash, or any negative adjustments.

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Staley Inc.
Statement of Cash Flows (partial)
Line Item Description Amount Amount
Cash flows from (used for) operating activities:

$- Select -
Adjustments to reconcile net income to net cash flows from (used for) operating activities:

- Select -

- Select -
Changes in current operating assets and liabilities:

- Select -

- Select -
Net cash flows from operating activities

Answer 1

Here’s how to prepare the "Cash flows from (used for) operating activities" section of the statement of cash flows for Staley Inc. using the indirect method:

Staley Inc.

Statement of Cash Flows (partial)

Cash flows from (used for) operating activities:

• Net income: $214,500

Adjustments to reconcile net income to net cash flows from (used for) operating activities:

• Depreciation expense: +$50,600
• Loss on disposal of equipment: +$38,500

Changes in current operating assets and liabilities:

• Increase in accounts receivable: -$29,700
• Increase in accounts payable: +$11,400

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Calculation of Net Cash Flows from Operating Activities:

1. Start with Net Income:
   $214,500

2. Add adjustments:
   +$50,600 (Depreciation expense)
   +$38,500 (Loss on disposal of equipment)

3. Subtract increase in accounts receivable:
   -$29,700

4. Add increase in accounts payable:
   +$11,400

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Final calculation:

Net Cash Flows from Operating Activities =
$214,500 + $50,600 + $38,500 - $29,700 + $11,400 = $285,300

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So, the "Cash flows from (used for) operating activities" section should look like this:

Staley Inc.

Statement of Cash Flows (partial)

Cash flows from (used for) operating activities:

• Net income: $214,500
  Adjustments to reconcile net income to net cash flows from (used for) operating activities:
• Depreciation expense: +$50,600
• Loss on disposal of equipment: +$38,500

Changes in current operating assets and liabilities:

• Increase in accounts receivable: -$29,700
• Increase in accounts payable: +$11,400

Net cash flows from operating activities: $285,300