Question

Alpha Company had the following account balances for 2018: Dec. 31 Jan. 1 Accounts receivable $ 44,000 $ 35,000 Accounts payable 55,000 60,000 Alpha reported net income of $210,000 for 2018. Assuming no other changes in current account balances, what is the amount of net cash provided by operating activities for 2018 reported in the statement of cash flows?

Answer 1

Answer:

The amount of net cash provided through operating activities for the year 2018 is $196,000

Explanation:

The amount of net cash provided through operating activities for the year 2018 is computed as:

Cash Flow Statement

For the year 2018

Net Income                                       $210,000

Increase in Accounts receivable     ($9,000)

Decrease in Accounts Payable        ($5,000)

Net Cash Flow from operating

activities                                              $196,000

Working Note:

Increase or decrease in Accounts Receivable = Jan 1 - Dec 31

= $35,000 - $44,000

= ($9,000)

Therefore, it is an increase in accounts receivable

Decrease or increase in Accounts Payable = Jan 1 - Dec 31

= $60,000 - $55,000

= $5,000

Therefore, there is decrease in accounts payable.