Question

Royal Corporation uses the indirect method of computing net cash flow from operating activities and reported the following for Year 2: Accounts receivable decreased by $10,300, merchandise inventory increased by $15,300, accounts payable decreased by $4,000, and income taxes payable increased by $18,800. If Royal Corporation reported net income for Year 2 of $157,800 (including $34,800 of depreciation expense), net cash flow from operating activities for Year 2 is:

Answer 1

Answer:

$202,400

Explanation:

The computation of the net cash flow from operating activities for year 2 is shown below:

= Net income + depreciation expense + decrease in account receivable - increase in merchandise inventory - decrease in account payable + increase in income tax payable

= $157,800 + $34,800 + $10,300 - $15,300 - $4,000 + $18,800

= $202,400