The net income reported on the income statement of Hutchins Company for the current year was $1,360,000.Depreciation recorded on plant assets was $257,000.Accounts receivable and inventories increased by $72,000 and $48,000, respectively.Prepaid expenses and accounts payable decreased by $6,000 and $66,000, respectively.How much cash was provided by operating activities during the year?
A)$1,380,000.
B)$1,500,000.
C)$1,437,000.
D)$1,797,000.

Question

Quizplus · Accepted Answer

To calculate cash provided by operating activities, start with net income and adjust for non-cash expenses and changes in working capital. Net income is $1,360,000. Add back depreciation of $257,000. Adjust for changes in working capital: subtract increases in accounts receivable ($72,000) and inventories ($48,000), and add decreases in prepaid expenses ($6,000) and accounts payable ($66,000). The calculation is: $1,360,000 + $257,000 - $72,000 - $48,000 + $6,000 + $66,000 = $1,437,000.

The Net Income Reported on the Income Statement of Hutchins