Question

"S Company reported net income for 2021 in the amount of $460,000. The company's financial statements also included the following: Increase in accounts receivable $ 75,000 Decrease in inventory 62,000 Increase in accounts payable 230,000 Depreciation expense 103,000 Gain on sale of land 147,000 What is net cash provided by operating activities under the indirect method?"

Answer 1

Answer:

$633,000

Explanation:

Calculation to determine net cash provided by operating activities under the indirect method

Using this formula

Net cash provided by operating activities=Net income-(+Increase in accounts receivable)-(-Decrease in inventory )+Increase in accounts payable+Depreciation expense -Gain on sale of land

Let plug in the formula

Net cash provided by operating activities=$460,000 -(+$75,000)-(-$62,000) + $230,000 +$103,000 - $147,000

Net cash provided by operating activities=$633,000

Therefore net cash provided by operating activities under the indirect method is $633,000