Gutierrez Company reported net income of $196,100 for 2020. Gutierrez also reported depreciation expense of $47,400 and a loss of $5,600 on the disposal of plant assets. The comparative balance sheet shows a decrease in accounts receivable of $10,900 for the year, a $12,900 increase in accounts payable, and a $3,200 decrease in prepaid expenses. Required:
Prepare the operating activities section of the statement of cash flows for 2020.

$276,100

Explanation:

Preparation of the operating activities section of the statement of cash flows for 2020

GUTIERREZ COMPANY Statement of Cash FlowsFor Year Ended December 31, 2020

Cash flows – operating activities

Net income $196,100

Add Reconciling adjustments to net income to netcash provided by activities:

Depreciation expense$47,400

Loss on Disposal of plant assets $5,600

Increase in Accounts payable $12,900

Decrease in Accounts receivable $10,900

Decrease in Prepaid expenses $3,200

Net cash – operating activities $276,100

Therefore the operating activities section of the statement of cash flows for 2020 will be $276,100

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