Question

Below is information for Leah Co.

Increase in Accounts Receivable: 2,000
Decrease in Inventory:1,000
Increase in Accounts Payable: 500
Increase in Salaries Payable:800
Increase in Equipment: 5,000
Decrease in Buildings:10,000
Net Income: 33,000
Depreciation Expense:6,000
Calculate cash provided (used) by operating activities:

Answer 1

To calculate cash provided by operating activities for Leah Co., start with the net income and adjust for non-cash expenses and changes in operating assets and liabilities. Additions and subtractions are made based on increases or decreases in specific accounts to arrive at the total cash flow from operations.

Step-by-step explanation:

The subject of the question pertains to the calculation of cash provided (used) by operating activities. Using the indirect method, we start with net income and adjust for changes in operating accounts and non-cash expenses to determine the cash flows from operating activities. For Leah Co., we consider the provided increases and decreases in various accounts as well as the net income and depreciation expense.

Calculation Procedure

1. Start with Net Income: $33,000.
2. Add back non-cash expense: Depreciation Expense: $6,000.
3. Adjust for changes in operating assets and liabilities:
4. Sum the adjustments to find the total cash provided by operating activities.

By following these steps and summing the adjustments, you calculate the cash flow from operating activities for Leah Co.