Amy Corporation's income statement showed the following: net income,$72,000; depreciation expense,$8,000; and gain on sale of plant assets,$6,000.An examination of the company's current assets and current liabilities showed the following changes as a result of operating activities: accounts receivable decreased $5,700; merchandise inventory increased $8,000; prepaid expenses decreased $2,100; accounts payable increased $1,700.Calculate the net cash provided (or used)by operating activities.
A) $68,800.
B) $82,500.
C) $66,500.
D) $71,800.
E) $75,500.

Question

Quizplus · Accepted Answer

To calculate net cash provided by operating activities, start with net income ($72,000), add back non-cash expenses like depreciation ($8,000), subtract gains on sales ($6,000), and adjust for changes in working capital: add decrease in accounts receivable ($5,700), subtract increase in inventory ($8,000), add decrease in prepaid expenses ($2,100), and add increase in accounts payable ($1,700). The total is $75,500.

Amy Corporation's Income Statement Showed the Following: Net Income,$72,000; Depreciation