Question

The comparative balance sheets for Lowery Company show these changes in noncash current asset accounts: accounts receivable decrease $80,000, prepaid expenses increase $28,000, and inventories increase $40,000.
Compute net cash provided by operating activities using the indirect method, assuming that net income is $186,000. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Answer 1

Answer:

$198,000

Explanation:

The computation of the net cash provided by operating activities by using the indirect method is presented below:

Cash flow from operating activities

Net income $186,000

Add: Decrease in account receivable $80,000

Less: Increase in prepaid expense -$28,000

Less: Increase in inventories -$40,000

Net cash provided by operating activities    $198,000