Answer:
The correct answer is d) $302.000
Explanation:
To get net cash flow using the indirect method we must make adjustments to the net income.
With the balance data, we get the decrease or increase of the different accounts.
End Beginning of each account
Cash $ 50,000 $ 60,000= Decrease in cash -10000
Accounts receivable 112,000 108,000= Increase in accounts receivable 4000
Inventories 105,000 93,000 = Increased inventory 12000
Prepaid expenses 4,500 6,500= Decreased in Prepaid expenses -2000
Accounts payable (merchandise creditors) 75,000 89,000= Decrease in accounts payable decreased -14000
It depends on the account if it is added or subtracted to net income. Below you will find the added account with a plus (+) and the subtracted ones with a minus (-)
Net income 295.000
Adjustment to reconcile the net income to cash
+ Depreciation expense 40.000
+ amortization of patents 5.000
- Decrease in cash (10.000)
- Increase in accounts receivable (4.000)
- inventory increased (12.000)
+ decreased Prepaid expenses 2.000
- accounts payable decreased (14.000)
Net cash 302.000
