Question

The net income reported on the income statement for the current year was $100,000. Depreciation recorded on plant assets was $25,000.

Accounts receivable and inventories decreased by $5,000 and $15,000,respectively.
Prepaid expenses and accounts payable increased by $500 and $4,000, respectively.

Using the indirect method, how much would be reported for net cash flows from operating activities in the statement of cash flows?
a. $130,000
b. $148,500
c. $141,500
d. $98,500

Answer 1

b. $148,500

Step-by-step explanation:

CASH FLOWS FROM OPERATING ACTIVITIES $

Net Income 100,000

Adjustments to reconcile net income to

net cash provided by operating activities:

Depreciation on Fixed Assets 25,000

(Increase) Decrease in Current Assets:

Accounts Receivables 5,000

Inventory 15,000

Prepaid Expenses (500)

Increase (Decrease) in Current Liabilities:

Accounts Payable 4,000

NET CASH PROVIDED BY OPERATING ACTIVITIES 148,500