Question

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

LANSING COMPANY Selected Balance Sheet Accounts
At December 31	2017	2016
Accounts receivable	\(5,600	\)5,800
Inventory	1,980	1,540
Account payable	4,400	4,600
Salaries payable	880	700
Utilities payable	220	160
Prepaid insurance	260	280
Prepaid rent	220	180

LANSING COMPANY Income Statement For Year Ended December 31, 2017
Sales revenue	\(97,200
Expenses
Cost of goods sold	42,000
Depreciation expenses	12,000
Salaries expenses	18,000
Rent expenses	9,000
Insurance expenses	3,800
Interest expenses	3,600
Utilities expenses	2,800
Net income	\)6,000

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 operating activities is$17,780.

Step-by-step solution

Definition of Operating Activities

Operating activities refer to all of the activities that are associated with day-to-day business operations. These activities include sales, purchases, and production.

Cash flow using the indirect method

Particular	Amount ($)	Amount ($)
Cash flow from operating activities:
Net income		$6,000
Add/less: adjustments to net income
Add: Depreciation expenses	12,000
Add/less: Changes in current assets and liabilities
Decrease in accounts receivable	200
Increase in inventory	(440)
Decrease in account payables	(200)
Increase in salaries payable	180
Increase in utilities payable	60
Decrease in prepaid insurance	20
Increase in prepaid rent	(40)	11,780
Cash flow from operations		$17,780