Question

reported net income of $22,000 for the current year. During the year, Inventory decreased by $7,800, Accounts Payable decreased by $8,400, Long-term Notes Payable increased by $40,000, Depreciation Expense was $10,800, gain on the sale of a piece of equipment was $500 and Accounts Receivable increased by $6,900. If the indirect method is used to calculating the operating section on the Statement of Cash Flows, what is the net cash provided (used) by operating activities

Answer 1

Answer:

$24,800

Explanation:

Indirect method reconciles the Net Income to Operating Cash flow by adjusting for non -cash items previously included in net income and changes in working capital.

Cash flow from Operating Activities

Net income                                                     $22,000

Add Depreciation Expense                            $10,800

Less gain on the sale of equipment was         ($500)

Decrease in Inventory                                      $7,800

Decrease in Accounts Payable                     ($8,400)

Increase in Accounts Receivable                 ($6,900)

net cash provided operating activities        $24,800                                                        

Therefore

The net cash provided (used) by operating activities is $24,800