Final answer:
To find the net cash provided by operating activities for Meyer Deli, adjust the net income with the changes in working capital and non-cash expenses: $40,000 + $10,000 (depreciation) - $14,000 (increase in receivables) - $6,000 (decrease in payables), resulting in $30,000.
Step-by-step explanation:
To calculate the net cash provided by operating activities, we start with the net income and adjust for changes in working capital and non-cash expenses. Meyer Deli reported a net income of $40,000. The accounts receivable increased by $14,000, which means cash was not received for those sales and should be subtracted from net income.
Accounts payable decreased by $6,000, indicating that cash was used to pay off some of the deli's liabilities, which also needs to be subtracted from net income. The depreciation expense of $10,000 is a non-cash expense and needs to be added back to the net income.
Here's the calculation:
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- Net Income = $40,000
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- Add: Depreciation Expense = $10,000
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- Subtract: Increase in Accounts Receivable = $14,000
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- Subtract: Decrease in Accounts Payable = $6,000
So, the net cash provided by operating activities is: $40,000 + $10,000 - $14,000 - $6,000 = $30,000.