Question

Fox, Inc. reported net income of $300,000 for the current. Changes occurred in several balance sheet

Answer 1

Answer:

$347,000

Explanation:

Cash flow, operating activities:

Net income                                                              $300,000

Depreciation expense                                                 52,000

Gain on sale of equipment                                          (5,000)    

Cash provided by operations                                 $347,000

Depreciation expense ($52,000) does not indicate any cash being paid, hence it must be added to Net Income.

The $5,000 must be subtracted from Net Income in the Operating Section, because the $18,000 ($25,000-$12,000+$5,000) contains the $5,000 of cash received, and it should be shown increasing the Net Income only in the Investing Section.

Hope this helps!