Prepare the operating activities section of the statement of cash flows using the indirect method.
FANNING BRANDS, INCORPORATED
Statement of Cash Flows (Operating Activities) For the Year Ended December 31, Year 2
Cash flows from operating activities:
Net income $56,988
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense $5,000
Gain on sale of equipment ($4,388)
Changes in operating assets and liabilities:
Decrease in accounts receivable $3,900
Increase in merchandise inventory ($8,488)
Decrease in prepaid insurance $6,400
Increase in accounts payable $7,100
Increase in salaries payable $608
Decrease in unearned service revenue ($958)
Net cash provided by operating activities $65,162