Question

Harding Corporation reports the following information:

Net income $450,000
Depreciation expense 140,000
Increase in accounts receivable 60,000
Harding should report cash provided by operating activities of
A) $650,000.
B) $250,000.
C) $530,000.
D) $370,000.

Answer 1

To determine the cash provided by operating activities for Harding Corporation, the net income is adjusted by adding back the non-cash depreciation expense and subtracting the increase in accounts receivable. The final calculation yields $530,000.

Step-by-step explanation:

To calculate the cash provided by operating activities, we start with the net income and adjust for non-cash expenses and changes in working capital. In this case, Harding Corporation's net income is $450,000. We add back the non-cash depreciation expense of $140,000. However, there was an increase in accounts receivable of $60,000, which is a use of cash and should be subtracted from the net income when calculating the cash provided by operating activities.

Therefore, the cash flow from operating activities can be calculated as:

• Net Income: $450,000
• Add: Depreciation Expense: $140,000
• Less: Increase in Accounts Receivable: $60,000

Net cash provided by operating activities of $530,000.