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The accounting records of Baddour Company provided the data below. Net loss $ 4,625 Depreciation expense 6,125 Increase in salaries payable 495 Decrease in accounts receivable 2,175 Increase in inventory 2,320 Amortization of patent 490 Reduction in discount on bonds 390 Prepare a reconciliation of net income to net cash flows from operating activities.

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Answer:

Net cash flows from operating activities $2,730

Explanation:

Cash flows from operating activities:

Net loss($4,625)

Adjustments for non cash effects:

Depreciation expense $6,125

Amortization of patent $490

Changes in operating assets and liabilities:

Increase in salaries payable $495

Decrease in accounts receivable $2,175

Increase in inventory($2,320)

Decrease in discount on bonds $390

Net cash flows from operating activities $2,730

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