A company's income statement showed the following: net income, $126,000; depreciation expense, $36,000; and gain on sale of plant assets, $10,000. An examination of the company's current assets and current liabilities showed the following changes as a result of operating activities: accounts receivable decreased $10,600; merchandise inventory increased $24,000; prepaid expenses increased $7,400; accounts payable increased $4,600. Calculate the net cash provided or used by operating activities.

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Business

Carlee Cohen

11 November, 00:09

A company's income statement showed the following: net income, $126,000; depreciation expense, $36,000; and gain on sale of plant assets, $10,000. An examination of the company's current assets and current liabilities showed the following changes as a result of operating activities: accounts receivable decreased $10,600; merchandise inventory increased $24,000; prepaid expenses increased $7,400; accounts payable increased $4,600. Calculate the net cash provided or used by operating activities.

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Clarence Coleman · Answer 1

Answer: $135,800

Explanation: cash flow from operating activities can be calculated using following equation : -

= Net income + depreciation - gain on sale of equipment + decrease in receivables - increase in inventory - increase in prepaid expenses + increase in accounts payable

= $126,000 + $36,000 - $10,000 + $10,600 - $24,000 - $7,400 + $4,600

= $135,800