Question

The net income reported on the income statement for the current year was $225,000. Depreciation recorded on plant assets was $38,000. Accounts receivable and inventories increased by $2,000 and $8,000, respectively. Prepaid expenses and accounts payable decreased by $1,000 and $11,000 respectively. How much cash was provided by operating activities

Answer 1

Answer:

The amount of cash provided by operating activities is $243,000.

Explanation:

The amount of cash provided by operating activities can be calculated as follows:

Cash provided by operating activities = Net income + Depreciation - Increase in accounts receivable - Increase in inventory + Decrease in prepaid expenses - Decrease in accounts payable

Cash provided by operating activities = $225,000 + $38,000 - $2,000 - $8,000 + $1,000 - $11,000

Cash provided by operating activities = $243,000

Therefore, the amount of cash provided by operating activities is $243,000.