A company had net income of $210000. Depreciation expense is $27000. During the year Accounts Receivable and Inventory increased $17000 and $42000 respectively. Prepaid Expenses and Accounts Payable decreased $5000 and $6000 respectively. There was also a loss on the sale of equipment of $2000. How much cash was provided by operating activities?
A) $175000
B) $179000
C) $241000
D) $271000

Question

Quizplus · Accepted Answer

The cash provided by operating activities can be calculated using the indirect method of the statement of cash flows. 
Net income = $210000
Add: Depreciation expense = $27000
Add: Increase in Accounts Receivable = $17000
Add: Increase in Inventory = $42000
Less: Decrease in Prepaid Expenses = $5000
Less: Decrease in Accounts Payable = $6000
Add: Loss on sale of equipment = $2000

Net cash provided by operating activities = $210000 + $27000 + $17000 + $42000 - $5000 - $6000 + $2000 = $179000.

Therefore, the best choice is B.

A Company Had Net Income of $210000