Question

A company had net income of $252,327. Depreciation expense is $21,821. During the year, Accounts Receivable and Inventory increased by $14,346 and $33,617, respectively. Prepaid Expenses and Accounts Payable decreased by $3,079 and $4,161, respectively. There was also a loss on the sale of equipment of $5,398. How much cash was provided by operating activities? Select the correct answer.
a. $279,546
b. $219,705
c. $261,357
d. $230,501

Answer 1

Answer: Option (d) is correct.

Explanation:

Given that,

Net Income = $252,327

Depreciation expense = $21,821

Accounts Receivable increased by = $14,346

Inventory increased by  = $33,617

Prepaid Expenses decreased by = $3,079

Accounts Payable decreased by = $4,161

Loss on the sale of equipment = $5,398

Operating Income = Net Income + Depreciation expense - Accounts Receivable - Inventory + Prepaid Expenses - Accounts Payable + Loss on the sale of equipment

= $252,327 + $21,821 - $14,346 -  $33,617 + $3,079 - $4,161 + $5,398

= $230,501