Question

The current sections of Martinez Corp.’s balance sheets at December 31, 2016 and 2017, are presented here. Martinez Corp.’s net income for 2017 was $157,131. Depreciation expense was $27,729. 2017 2016 Current assets Cash $107,835 $ 101,673 Accounts receivable 82,160 91,403 Inventory 172,536 176,644 Prepaid expenses 27,729 22,594 Total current assets $390,260 $392,314 Current liabilities Accrued expenses payable $ 15,405 $ 5,135 Accounts payable 87,295 94,484 Total current liabilities $102,700 $ 99,619 Prepare the net cash provided (used) by operating activities section of the company’s statement of cash flows for the year ended December 31, 2017, using the indirect method

Answer 1

Net cash is 226.967

Step-by-step explanation:

The indirect method involves the adjustment of net income with changes in balance sheet accounts to arrive at the amount of cash generated by operating activities.

First, we must find if the account increase o decrease. We get this number by the difference between the amount of 2017 - amount of 2016

It depends on the account if it is added or subtracted to net income. Below you will find the added account with a plus (+) and the subtracted ones with a minus (-)

Notice the amounts of any decreases are in parentheses.

Net income 157.131

Adjustment to reconcile the net income to cash

+ Depreciation expense 27.729

+ Cash 6.162

+ decrease in accounts receivable 9.243

+ inventory decreased 4.108

+ Prepaid expenses decrease 5.135

+ Increase in expenses payable 10270

+ decreased Accounts payable 7.189

Net cash 226.967