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?

1) $330,000
2) $730,000
3) $610,000
4) $450,000

Answer 1

To calculate cash provided by operating activities, we start with net income, add back non-cash expenses like depreciation, and subtract increases in accounts receivable. For Harding Corporation, cash provided by operating activities is $610,000.

Step-by-step explanation:

The student asked about calculating cash provided by operating activities for Harding Corporation given certain financial information. To find this, we start with the net income, which is $530,000. We then add back the non-cash expense, depreciation, which is $140,000. However, we need to adjust for the increase in accounts receivable, as this represents earnings that have not yet been received in cash. This increase in accounts receivable is $60,000. Therefore, we subtract this amount from the subtotal. The calculation is as follows:

Net Income: $530,000

Add: Depreciation Expense: $140,000

Subtract: Increase in Accounts Receivable: $60,000

Cash Provided by Operating Activities: $610,000

This means the correct answer is 3) $610,000.