Question

The comparative balance sheets for Gale Company show these changes in noncash current asset accounts: accounts receivable decreased $80,000, prepaid expenses increased $28,000, and inventories increased $40,000. Compute net cash provided by operating activities using the indirect method, assuming that net income is $186,000.

Answer 1

$198,000

Step-by-step explanation:

Given that,

Net income = $186,000

Decrease in accounts receivable = $80,000

Increase in prepaid expense = $28,000

Increase in inventories = $40,000

Net cash provided by operating activities using the indirect method:

= Net income + Decrease in accounts receivable - Increase in prepaid expense - Increase in inventories

= $186,000 + $80,000 - $28,000 - $40,000

= $198,000