Question

A company's income statement showed the following: net income, $132,000; depreciation expense, $39,000; and gain on sale of plant assets, $13,000. An examination of the company's current assets and current liabilities showed the following changes as a result of operating activities: accounts receivable decreased $11,200; merchandise inventory increased $27,000; prepaid expenses increased $8,000; accounts payable increased $5,200. Calculate the net cash provided or used by operating activities.

Answer 1

Answer:

Net Cash provided (used by) operating activities $139,400

Explanation:

The computation of the net cash provided or used by the operating activities is as follows"

Cash flow from operating activities

Net Income     $132,000  

Adjustments:  

Add Depreciation expense $39,000  

Less: Gain on sale of plant assets ($13,000)  

Add: Decreased in accounts receivables $11,200  

LesS: Increase in inventory ($27,000)  

Less: Increase in prepaid expense ($8,000)  

Add: Increase in accounts payable $5,200  

Net Cash provided (used by) operating activities $139,400