Cho Limited reported cash flow from operations of $136,000 for the year.A review of the company's balance sheet and income statement also showed the following: $\begin{array}{lr}
\text { Amortization expense for the year } & \$ 16,000 \
\text { Increase in accounts receivable } & \$ 30,000 \
\text { Decrease in inventory } & \$ 18,000 \
\text { Increase in accounts payable } & \$ 5,500 \
\text { Decrease in interest payable } & \$ 3,000
\end{array}$ What was Cho's net income for the year?

Question

Quizplus · Accepted Answer

To calculate net income from cash flow from operations, we adjust for changes in working capital and non-cash expenses. Starting with the cash flow from operations of $136,000, we add back amortization expense ($16,000), subtract the increase in accounts receivable ($30,000), add the decrease in inventory ($18,000), add the increase in accounts payable ($5,500), and subtract the decrease in interest payable ($3,000). This results in a net income of $129,500.

Cho Limited Reported Cash Flow from Operations of $136,000 for the Year.A