The Club, Incorporated (TCI)presents its statement of cash flows using the indirect method. For the current year the Company reported net income of $120,000. All sales are on account and the balance in the Accounts Receivable account increased by $7,000. The balance in the unearned revenue account decreased by $6,000. Also, the company reported depreciation expense of $15,000 and a gain on the sale of equipment of $8,000. Based on this information alone, the amount of the cash flow from operating activities shown on statement of cash flows is
A)$114,000
B)$126,000
C)$128,000
D)$130,000

Question

Quizplus · Accepted Answer

The cash flow from operating activities can be calculated using the indirect method as follows:

Net Income $120,000
Add:
Depreciation Expense $15,000
Loss on Sale of Equipment $8,000
Subtract:
Increase in Accounts Receivable ($7,000)
Decrease in Unearned Revenue $6,000
Cash Flow from Operating Activities $142,000 - $13,000 = $129,000

Therefore, the correct answer is A) $114,000.

The Club, Incorporated (TCI)presents Its Statement of Cash Flows Using