Question

Salt Lake Company’s 2017 income statement and selected balance sheet data (for current assets and current liabilities) at December 31, 2016 and 2017, follow.

SALT LAKE COMPANY Income Statement For Year Ended December 31, 2017

Sales revenue	\(156,000
Expenses
Cost of goods sold	72,000
Depreciation expenses	32,000
Salaries expenses	20,000
Rent expenses	5,000
Insurance expenses	2,600
Interest expenses	2,400
Utilities expenses	2,000
Net income	\)20,000

SALT LAKE COMPANY Selected Balance Sheet Accounts

At December 31	2017	2016
Accounts receivables	\(3,600	\)3,000
Inventory	860	980
Account payable	2,400	2,600
Salaries payable	900	600
Utilities payable	200	0
Prepaid insurance	140	180
Prepaid rent	100	200

Required

Prepare the cash flows from operating activities section only of the company’s 2017 statement of cash flows using the indirect method

Short answer

Cash flow from operations totals$51,960.

Step-by-step solution

Definition of Cash Flow from Operation

Cash flow from operation is a part of the cash flow statement that deals with the inflow and outflow of cash related to the daily business operations.

Cash flow statement using the indirect method

Particular	Amount $
Net income	$20,000
Add/Less: Adjustments to net income
Depreciation expenses	32,000
Add/Less: Changes in current liabilities and current assets
Increase in accounts receivable	(600)
Decrease in inventory	120
Decrease in account payable	(200)
Increase in salaries payable	300
Increase in utilities payable	200
Decrease in prepaid insurance	40
Decrease in prepaid rent	100
Cash flow from operations	$51,960