Question

The current sections of Whispering Winds Corp.’s balance sheets at December 31, 2019 and 2020, are presented here. Whispering Winds’s net income for 2020 was $152,000. Depreciation expense was $24,900. 2019 2018 Current assets Cash $106,600 $99,100 Accounts receivable 109,700 77,900 Inventory 157,000 171,900 Prepaid expenses 26,700 25,100 Total current assets $400,000 $374,000 Current liabilities Accrued expenses payable $14,600 $8,400 Accounts payable 85,500 95,100 Total current liabilities $100,100 $103,500 Prepare the net cash provided by operating activities section of the company’s statement of cash flows for the year ended December 31, 2020, using the indirect method.

Answer 1

Answer:

The amount of cash provided by  operating activities is $155,000

Explanation:

The net cash provided by operating activities is shown below by the cash flow statement extract:

Net income                                                                 $152,000

depreciation  expense                                             $24,900

increase in accounts receivable($109700-$77900)($31,800)

Decrease in inventory($171,900-$157,000)              $14,900

increase in prepaid expenses($26,700-$25,100)   ($1,600)

increase in accrued expenses($14,600-$8400)      $6,200

decrease in accounts payable($95,100-$85,500) ($9,600)

net cash provided by operating activities                $155,000

Note:

An increase in liability means depriving the other party some cash,hence it is positive and vice versa.