Statement of Cash Flows
(1) Prepare the operating activities section of the statement of cash flows based on the following information for A Company:
Net Income $195,000
Depreciation Expense $45,000
Loss on Sale Of Equipment $5,000
Decrease in Accounts Receivable Compared to Prior Year $15,000
Increase in Accounts Payable Compared to Prior Year $17,000
Decrease in Prepaid Expenses Compared to Prior Year $4,000
Use the Indirect Method.
(2) For each reconciliation item, explain why it has the specific effect (positive or negative) on cash basis.