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Depreciation and Cash Flow O'hare Company's only asset as of January 1, 2017, was a limousine
Depreciation and Cash Flow
O'hare Company's only asset as of January 1, 2017, was a limousine. During 2017, only the following three transactions occurred:
Services of $111,100 were provided on account.
All accounts receivable were collected.
Depreciation on the limousine was $15,100.
Required:
2. Determine the amount of the net cash inflow for O'hare for 2017.
4. If O'hare developed a cash flow statement for 2017 using the indirect method, what amount would appear in the category titled Cash Flow from Operating Activities?
Expert Solution
2. Computation of Amount of the Net Cash Inflow for O'hare for 2017:
Net Inflow = Service Revenue = $111,100
As depreciation is a non cash item So, net inflow will be $111,100.
4.Computation of Cash Flow from Operating Activities:
Net Income ($111,100-$15,100) = $96,000
Add: Depreciation = $15,100
Add: Decrease in Accounts Receivables = $111,100
Cash Flow from Operating Activities = $222,200
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