1. Problem 12-5A Thornton Company's income statement contained the condensed information
below THORNTON COMPANY Income Statement For the Year Ended December 31, 2014
$2,263,010 Service revenue Operating expenses, excluding depreciation Depreciation expense
Loss on disposal of plant assets Income before income taxes Income tax expense Net income
$1,432,462 128,315 37,328 1,598,105 664,905 130,648 534,257 Thornton's balance sheet
contained the comparative data at December 31. 2014 2013 Accounts receivable Accounts
payable Income taxes payable $163,310 95,653 30,329 $139,980 74,656 16,331 Accounts
payable pertain to operating expenses Prepare the operating activities section of the statement of
cash flows using the indirect method
Solution
Particulars Amount Amount Cash Flow from Operating Activities Net income      Â
534,257.00 Income Taxes Provision       130,648.00 Add : Loss On Disposal of
Assets         37,328.00 Add: Depreciation       128,315.00 Income
Taxes Paid(163310 + 130648 -30329) Â Â Â (116,650.00) Less Increase in AR Â Â Â Â Â Â
(23,330.00) Add : Increase in Accounts payable         20,997.00 Cash Flow from
Operating Activities 711,565