Northington, Inc. is preparing the company's statement of cash flows for the fiscal year just ended. Using the following information, determine the amount of cash flows from operating activities using the indirect method: $\begin{array}{|l|r|}
\hline \text { Net income } & \$ 182,000 \
\hline \text { Gain on the sale of equipment } & 12,300 \
\hline \text { Proceeds from the sale of equipment } & 92,300 \
\hline \text { Depreciation expense - equipment } & 50,000 \
\hline \text { Payment of bonds at maturity } & 100,000 \
\hline \text { Purchase of land } & 200,000 \
\hline \text { Issuance of common stock } & 300,000 \
\hline \text { Increase in merchandise inventory } & 35,400 \
\hline \text { Decrease in accounts receivable } & 28,800 \
\hline \text { Increase in accounts payable } & 23,700 \
\hline \text { Payment of cash dividends } & 32,000\\hline
\end{array}$

Question

Quizplus · Accepted Answer

To calculate cash flows from operating activities using the indirect method, start with net income ($182,000), subtract the gain on the sale of equipment ($12,300), add back depreciation expense ($50,000), subtract the increase in inventory ($35,400), add the decrease in accounts receivable ($28,800), and add the increase in accounts payable ($23,700). The calculation is: $182,000 - $12,300 + $50,000 - $35,400 + $28,800 + $23,700 = $236,800.

Northington, Inc A)$332,200