Question

A company's income statement showed the following: net income, $115,000; depreciation expense, $30,500; and gain on sale of plant assets, $4,500. An examination of the company's current assets and current liabilities showed the following changes accounts receivable decreased $9,500; merchandise inventory increased $18,500; prepaid expenses increased $6,300; accounts payable increased $3,500. Calculate the net cash provided or used by operating activities.

Answer 1

Answer:

$129,200

Explanation:

Cash flow from Operating activities

net income,                                                                 $115,000

adjust for non cash items :

depreciation expense,                                               $30,500

gain on sale of plant assets,                                      ($4,500)

adjust for changes in working capital :

decrease in accounts receivable                               $9,500

increase in merchandise inventory                          ($18,500)

increase in prepaid expenses                                   ($6,300)

increase in accounts payable                                     $3,500

Cash flow from Operating Activities                       $129,200