Question

During the current year, Morgan, Inc., had net income of $657,000. Morgan also recorded $203,000 in deprecation expense and had the following changes in its balance sheet accounts: Accounts Receivable $ 28,000 increase Inventories 12,000 decrease Accounts Payable 21,000 decrease Compute the net cash provided by operating activities using the indirect method.

Answer 1

$823,000

Step-by-step explanation:

To determine the net cash provided by operating activities using the indirect method we can use the following formula:

net cash flow = net income + depreciation expense - accounts receivable increase + inventory decrease - accounts payable decrease

net cash flow = $657,000 + $203,000 - $28,000 + $12,000 - $21,000 = $823,000

If accounts receivable decreased, then it would be added.

If inventories increased, then it would be subtracted.

If accounts payable increased, then it would be added.