Question

For the year ending 12/31/2022, the Income Statement for Birch Company shows Depreciation Expense of $110,000 and net income of $890,000. During the year, accounts receivable and inventory increased by $60,000 and $160,000, respectively. Prepaid expenses and accounts payable decreased $8,000 and $16,000, respectively. There was also a loss on the sale of equipment of $12,000. For 2022, how much cash was provided by operating activities?

Answer 1

$784,000

Step-by-step explanation:

Calculation for How much cash was provided by operating activities

Using this formula

Cash=(Net income+Depreciation expense -Accounts receivable - Inventory increased+Prepaid expenses -Accounts payable decreased+ Loss on Sale of equipment)

Let plug in the formula

Cash=(890,000+110,000-60,000-160,000+8,000-16,000+12,000)

Cash=$784,000

Therefore the amount of cash that was provided by operating activities will be $784,000