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7 April, 09:13

A company's income statement showed the following: net income, $122,000; depreciation expense, $34,000; and gain on sale of plant assets, $8,000. An examination of the company's current assets and current liabilities showed the following changes as a result of operating activities: accounts receivable decreased $10,200; merchandise inventory increased $22,000; prepaid expenses increased $7,000; accounts payable increased $4,200. Calculate the net cash provided or used by operating activities.

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  1. 7 April, 11:48
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    cash generated from operating activities 133,400

    Explanation:

    net income 122,000

    non-monetary adjustment

    depreciation expense 34,000

    gain on sale (8,000)

    adjusted income 148,000

    ↑↓

    Changes in working capital

    ↓10,200 on AR 10,200

    ↑22,000 on Inventory (22,000)

    ↑7,000 prepaid expenses (7,000)

    ↑4,200 account payable 4,200

    total change in WP (14,600)

    cash generated from operating activities 133,400
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