Sauder Corporation reports the following information: Sauder should report cash provided by operating activities of
A) $220,000.
B) $280,000.
C) $360,000.
D) $420,000.

Question

Sauder Corporation reports the following information:  Sauder should report cash provided by operating activities of
A) $220,000. 
B) $280,000. 
C) $360,000. 
D) $420,000.

Quizplus · Accepted Answer

To calculate cash provided by operating activities using the indirect method, we start with net income and adjust for non-cash transactions and changes in current assets and liabilities.

Starting with net income of $190,000, we add back depreciation and amortization ($30,000) and decrease in accounts receivable ($10,000). We then subtract increase in accounts payable ($20,000), increase in inventory ($50,000), and increase in prepaid expenses ($30,000).

So, cash provided by operating activities is:

$190,000 + $30,000 - $10,000 - $20,000 - $50,000 - $30,000 = $360,000

Therefore, the correct answer is C.

Sauder Corporation Reports the Following Information: Sauder Should Report