Rodriguez Company completed its income statement and comparative balance sheet for the current year and provided the following information: Income Statement for Current Year Service revenue $ 54,000 Expenses Salaries $ 46,000 Depreciation 4,500 Amortization of copyrights 200 Other expenses 9,700 60,400 Net loss $ (6,400 ) Partial Balance Sheet Current Year Prior Year Accounts receivable $ 8,000 $ 13,000 Salaries payable 12,000 1,000 Other accrued liabilities 1,000 2,800 In addition, Rodriguez bought a small service machine for $5,000. Required: 1. Present the operating activities section of the statement of cash flows for Rodnguez Company using the indirect method.

The cash flow statement is the financial statement that records the inflow and outflow of cash from the company or the business. This statement is important as it is used for investment or borrowing decision-making by the managers of the company.

Under the indirect method the cash activities are segregated into three parts:

The net cash flow from operating activities is $12,500.

The operating activities section of the cash flow statement for Rodriguez Company is attached in the image below.

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Answer and Explanation:

The preparation of the operating activities section is shown below:

                                         Rodriguez Company

                             Statement of Cash Flows (partial)

Cash flows from operating activities:  

Net loss$ (6,400)  

Adjustments  

Add: Depreciation expenses$4,500

Add: Amortization of copyright$200

Add: Decrease in accounts receivable$5,000  

Add: Increase in salaries payable$11,000  

Less: Decrease in other current liabilities-$1,800

Net cash flow from operating activities$12,500

The negative sign reflects the cash outflow and the positive sign reflects the cash inflow