Question

Jarvis, Inc. reported net income of $59,000 for the year ended December 31, 2018 Included in net income were depreciation expense of $8,400 and a gain on sale of equipment of $1,700. Each of the following accounts increased during 2018:

Accounts receivable------------$2,200
Inventory------------------------$4,500
Prepaid rent---------------------$6,800
Available-for-sale securities----$1,000
Accounts payable--------------$5,000
What is the amount of cash provided by operating activities for Jarvis, Inc. for the year ended December 31, 2018?
a. $56,200
b. $58,900
c. $47,200
d. $57,200

Answer 1

The cash provided by operating activities for Jarvis, Inc. for the year ended December 31, 2018 is calculated by adjusting the net income for non-cash expenses and changes in working capital, resulting in $57,200.

Step-by-step explanation:

To calculate the cash provided by operating activities for Jarvis, Inc. for the year ended December 31, 2018, we begin with the net income and adjust it for changes in working capital and non-cash expenses. Here is the step-by-step calculation:

• Start with net income: $59,000.
• Add back non-cash expenses:
  
• Subtract gains not related to operations:
  
• Adjust for changes in working capital:
  

Now, let’s add and subtract these amounts from the net income:

$59,000 (Net Income) + $8,400 (Depreciation) - $1,700 (Gain on sale) - $2,200 (Accounts Receivable) - $4,500 (Inventory) - $6,800 (Prepaid Rent) + $5,000 (Accounts Payable) = $57,200.

Therefore, the amount of cash provided by operating activities for Jarvis, Inc. for the year ended December 31, 2018 is $57,200, which corresponds to option (d).