Question

Harding Corporation reports the following information:

Net income $530,000
Depreciation expense 140,000
Increase in accounts receivable 60,000
Harding should report cash provided by operating activities of------

Answer 1

Cash provided by operating activities for Harding Corporation is $610,000, after adjusting net income by adding back the non-cash depreciation expense and subtracting the increase in accounts receivable.

Step-by-step explanation:

To calculate the cash provided by operating activities, we need to adjust the net income for changes that do not involve cash transactions. The depreciation expense is a non-cash charge that should be added back to net income since it reduces profit but does not consume cash. Increases in accounts receivable suggest that revenue has been recognized, but cash has not yet been received, so this amount should be subtracted from net income.

Net income is $530,000, depreciation expense is $140,000, and the increase in accounts receivable is $60,000. Therefore, the calculation is as follows:

• Net Income: $530,000
• Add: Depreciation Expense: $140,000
• Subtract: Increase in Accounts Receivable: $60,000

So, cash provided by operating activities equals $530,000 + $140,000 - $60,000 = $610,000.