Ripley Corporation’s accumulated depreciation—equipment account increased by $15,325 while $3,800 of patent amortization was recognized between balance sheet dates. There were no purchases or sales of depreciable or intangible assets during the year. In addition, the income statement showed a gain of $22,420 from the sale of investments.

Reconcile a net income of $286,900 to net cash flows from operating activities

To reconcile Ripley Corporation’s net income to net cash flows from operating activities, we need to make adjustments for non-cash expenses, gains, and losses, and other changes that impacted net income but did not result in cash inflows or outflows.

Here’s how we reconcile it:

1. **Start with the Net Income**:  
   \[ \text{Net Income} = \$286,900 \]

2. **Add back non-cash expenses**:
   - **Depreciation Expense**: The increase in accumulated depreciation indicates a depreciation expense (a non-cash charge) of:
     \[ \text{Depreciation Expense} = \$15,325 \]
   - **Amortization of Patents**: This also represents a non-cash charge that we add back:
     \[ \text{Patent Amortization} = \$3,800 \]

3. **Adjust for non-operating items**:
   - **Gain on Sale of Investments**: Gains from sales of investments do not result from operating activities, so we need to subtract the gain to focus on operating cash flow:
     \[ \text{Gain on Sale of Investments} = -\$22,420 \]

Now, we combine all these values to determine the net cash flow from operating activities:

\[
\text{Net Cash Flows from Operating Activities} = 286,900 + 15,325 + 3,800 - 22,420
\]

\[
\text{Net Cash Flows from Operating Activities} = 283,605
\]

### Final Answer:
The net cash flows from operating activities is **$283,605**.

Would you like further details or have any questions about the process?

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Here are some additional related questions:

1. How would a decrease in accumulated depreciation affect cash flows from operating activities?
2. How would the purchase of new equipment impact the net cash flow from operating activities?
3. Why are non-cash charges added back to net income in cash flow reconciliation?
4. How does the sale of an investment affect cash flow from investing activities?
5. How are amortization and depreciation similar, and why are they treated the same way in cash flow reconciliation?

#### Tip:
When reconciling cash flow from operations, remember to only add back non-cash expenses and adjust for non-operating gains or losses; these don’t impact actual cash in or out for core operations.

Ripley Corporation’s accumulated depreciation—equipment account increased by $15,325 while $3,800 of patent amortization was recognized between balance sheet dates. There were no purchases or sales of depreciable or intangible assets during the year. In addition, the income statement showed a gain of $22,420 from the sale of investments. Reconcile a net income of $286,900 to net cash flows from operating activities.

Reconcile Ripley Corporation's net income of $286,900 to net cash flows from operating activities. Learn to adjust for non-cash items like a $15,325 depreciation expense, $3,800 in patent amortization, and a $22,420 gain from investment sales. This solution provides step-by-step adjustments suitable for finance and accounting students.

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