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.

Question

Business

Jared Owens

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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Shyla Pennington · Answer 1

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