Norbury Corporation's net income last year was $40,000. The company did not sell or retire any property, plant, and equipment last year. Changes in selected balance sheet accounts for the year appear below: Increases (Decreases) Asset and Contra-Asset Accounts: Accounts receivable $ 17,000 Inventory $ (4,300) Prepaid expenses $ 12,500 Accumulated depreciation $ 31,000 Liability Accounts: Accounts payable $ 16,500 Accrued liabilities $ (8,800) Income taxes payable $ 3,400 Based solely on this information, the net cash provided by (used in) operating activities under the indirect method on the statement of cash flows would be:

Question

Business

Jade Hernandez

1 January, 10:17

Norbury Corporation's net income last year was $40,000. The company did not sell or retire any property, plant, and equipment last year. Changes in selected balance sheet accounts for the year appear below: Increases (Decreases) Asset and Contra-Asset Accounts: Accounts receivable $ 17,000 Inventory $ (4,300) Prepaid expenses $ 12,500 Accumulated depreciation $ 31,000 Liability Accounts: Accounts payable $ 16,500 Accrued liabilities $ (8,800) Income taxes payable $ 3,400 Based solely on this information, the net cash provided by (used in) operating activities under the indirect method on the statement of cash flows would be:

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Kyler David · Answer 1

The net cash provided by (used in) operating activities under the indirect method on the statement of cash flows would be $56,900

Explanation:

Cash Flow Statement : The cash flow statement shows the cash position of the company during a year. It includes three types of activities - Operating activities, financing activities, investing activities.

Indirect Method of Cash flow Statement : In this method, the changes in current assets and current liabilities are shown. The increase in current liabilities are added and decrease in current liabilities are deducted. But in current assets, it is opposite.

The computation of cash flow statement in operating activities under indirect method is given below:

Net income = $40,000

Add : Decrease in inventory = $ 4300

Less : Increase in Accounts Receivable = ($17,000)

Less : Increase in Prepaid Expenses = ($ 12,500)

Add : Accumulated depreciation = $ 31,000

Add: Increase in accounts payable = $ 16,500

Less : Decrease in Accrued liabilities = $ (8,800)

Add : Increase in tax payable = $3400

Net cash in operating activities = $56,900

Hence, the net cash provided by (used in) operating activities under the indirect method on the statement of cash flows would be $56,900