A company's income statement showed the following: net income,$134,000; depreciation expense,$30,000; and gain on sale of plant assets,$4,000.An examination of the company's current assets and current liabilities showed the following changes: accounts receivable decreased $9,400; merchandise inventory increased $18,000; prepaid expenses increased $6,200; accounts payable increased $3,400.Calculate the net cash provided or used by operating activities.

Question

Quizplus · Accepted Answer

To calculate the net cash provided by operating activities, start with the net income and adjust for non-cash expenses and changes in working capital:1. Start with net income: $134,0002. Add back depreciation expense (non-cash): $30,0003. Subtract gain on sale of plant assets (non-cash gain): -$4,0004. Adjust for changes in current assets and liabilities:   - Decrease in accounts receivable (cash inflow): $9,400   - Increase in inventory (cash outflow): -$18,000   - Increase in prepaid expenses (cash outflow): -$6,200   - Increase in accounts payable (cash inflow): $3,400Net cash provided by operating activities = $134,000 + $30,000 - $4,000 + $9,400 - $18,000 - $6,200 + $3,400 = $148,600.

A Company's Income Statement Showed the Following: Net Income,$134,000; Depreciation