Question

Lindsay Corporation had net income for 2018 of $3,000,000. Additional information is as follows:

Depreciation of plant assets-----------$1,200,000
Amortization of intangibles---------------240,000
Increase in accounts receivable----------420,000
Increase in accounts payable-------------540,000
Lindsay's net cash provided by operating activities for 2018 was
a. $4,560,000.
b. $4,440,000.
c. $4,320,000.
d. $2,680,000.

Answer 1

The net cash provided by operating activities for Lindsay Corporation in 2018 was $4,560,000.

Step-by-step explanation:

The net cash provided by operating activities can be calculated using the indirect method by adjusting net income for non-cash expenses and changes in working capital.

In this case:

1. Add back depreciation and amortization: $1,200,000 + $240,000 = $1,440,000
2. Subtract the increase in accounts receivable: $420,000
3. Add the increase in accounts payable: $540,000
4. Net cash provided by operating activities = Net income + Depreciation & Amortization - Increase in accounts receivable + Increase in accounts payable = $3,000,000 + $1,440,000 - $420,000 + $540,000 = $4,560,000

Therefore, the correct answer is (a) $4,560,000.