Question

Use the following information about the current year's operations of a company to calculate cash provided by operations. Net income $200,000 Increase in Accounts Payable 5,000 Increase in Accounts Receivable 7,000 Decrease in Merchandise Inventory 10,000 Increase in Salaries Payable 6,000 Depreciation Expense 10,000 Loss on Sale of Equipment 6,000

Answer 1

Answer:

Net cash flow from operating activity $230,000

Explanation:

The computation of the cash flow from operating activities is shown below;

Cash flow from operating activities

Net Income  $200,000

Adjustments made

Add: Depreciation expense $10,000

Add: Loss on sale of equipment $6,000

Add: Increase in Account payable $5000

Less: Increase in Account receivable ($7,000)

Add: Decrease in Merchandise Inventory $10,000

Add: Increase in salaries payable $6,000

Net cash flow from operating activity $230,000