Question

The current sections of Metlock, Inc.’s balance sheets at December 31, 2019 and 2020, are presented here. Metlock’s net income for 2020 was $151,400. Depreciation expense was $24,200. 2019 2018 Current assets Cash $103,000 $97,100 Accounts receivable 110,000 80,800 Inventory 159,000 171,500 Prepaid expenses 26,000 25,000 Total current assets $398,000 $374,400 Current liabilities Accrued expenses payable $14,500 $9,100 Accounts payable 84,500 95,600 Total current liabilities $99,000 $104,700 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. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Answer 1

Answer:

The Net cash is 193.100

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.  

Cash $103,000 $97,100

Decrease in cash 5.900

Accounts receivable 110,000 80,800

Decrease in accounts receivable 29.200

Inventory 159,000 171,500

inventory increased 12.500

Prepaid expenses 26,000 25,000

Decreased Prepaid expenses 1.000

Accrued expenses payable $14,500 $9,100

expenses payable decreased 5.400

Accounts payable 84,500 95,600

accounts payable increased 11.100

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 (-)

In this case,

Net income 151.400

Adjustment to reconcile the net income to cash  

+ Depreciation expense 24.200

- Decrease in cash (5.900)

+ Decrease in accounts receivable 29.200

- inventory increased (12.500)

+ Decreaded Prepaid expenses 1.000

- expenses payable decreased (5.400)

+ accounts payable increased  11.100

 

Net cash 193.100