A company had net income of $252,000. Depreciation expense is $26,000. During the year, accounts receivable and inventory increased by $15,000 and $40,000, respectively. Prepaid expenses and accounts payable decreased by $2,000 and $4,000, respectively. There was also a loss on the sale of equipment of $3,000. How much was the net cash flow from operating activities on the statement of cash flows using the indirect method?

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Business

Frederick Stone

15 May, 23:12

A company had net income of $252,000. Depreciation expense is $26,000. During the year, accounts receivable and inventory increased by $15,000 and $40,000, respectively. Prepaid expenses and accounts payable decreased by $2,000 and $4,000, respectively. There was also a loss on the sale of equipment of $3,000. How much was the net cash flow from operating activities on the statement of cash flows using the indirect method?

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Leanna Mendez · Answer 1

The Net cash is 224.000

Explanation:

To get net cash flow using the indirect method we must make adjustment to the net income.

It depends on the movement if it is added or subtracted to net income

In this case,

Net income 252.000

+ Depreciation expense 26.000

- Increase in accounts receivable (15.000)

- inventory increased (40.000)

+ decreased Prepaid expenses 2.000

- accounts payable decreased (4.000)

+ loss on the sale of equipment 3.000

Net cash 224.000