Question

The following data is available for Sampson Corporation. Sampson Corporation Accounts Item Amount Net income $200,000 Depreciation expense 60,000 Dividends paid 90,000 Loss on sale of land 15,000 Decrease in accounts receivable 30,000 Decrease in accounts payable 45,000 Net cash provided by operating activities is $Placeholder for missing word.

Answer 1

Answer:

cash flow provided by operation         260,000

Explanation:

net income                                        200,000

adjustment for non-monetary terms: (A)

depreciation expense       60,000

loss on sale of land            15,000

adjusted net income                         275,000

Change in working capital:

decrease in AR           30,000

Decrease in AP          (45,000) (B)

net change in WC:      (15,000) (C)

cash flow provided by operation         260,000

(A) we must focus on cahs movement so the depreciation and loss on sale which are non-mentary term. This are not related to cash

(B) the decrease in account receivable means we colelct from our customer more.

(C) the decrease in accounts payable represent we use more cash to pay up the suppliers