Question

Harlow Industries reported net income of $28,000 for the current year. During the year, Inventory decreased by $8,500, Accounts Payable decreased by $8,750, Depreciation Expense was $11,500, and Accounts Receivable increased by $8,000. If the indirect method is used, what is the net cash provided by operating activities?

Answer 1

Answer: $14,250

Explanation: Using the indirect method of cash flow:

Operating Activities:

Net income                                                    $28,000

Less: Decrease in Inventory                        ($8,500)

Less: Decrease in Accounts Payable          (8,750)

Add: Depreciation                                          11,500

Less: Increase in Accounts Receivable       (8,000)

Net cash provided by operating activities  $14,250