Question

During 2015, the Magneto Company had a net income of 50526. In addition, selected accounts showed the following changes:

Accounts Receivable increased by3071
Accounts Payable increased by 852
Building decreased by4045
Depreciation Expense increased by 1413
Bonds Payable increased by8077

What was the amount of cash provided by operating activities?

Answer 1

The amount of cash provided by operating activities is $51,917.

Step-by-step explanation:

To determine the amount of cash provided by operating activities, we need to use the indirect method of preparing the statement of cash flows. We start with the net income, which is $50,526. Next, we adjust for non-cash expenses and changes in working capital. The adjustments include adding back depreciation expense of $1,413, subtracting the increase in accounts receivable of $3,071, adding the increase in accounts payable of $852, and subtracting the decrease in the building of $4,045.

So, the formula for calculating cash provided by operating activities is:

$50,526 (net income) + $1,413 (depreciation) + $3,071 (decrease in accounts receivable) + $852 (increase in accounts payable) - $4,045 (decrease in the building) = $51,917