Question

In preparing a companys statement of cash flows using the indirect method, the following is available:

net income $52000
accounts payable increased by 8000
accounts receivable decreased by 17000
inventories increased by 5000
depreciation expense 30000

Find net cash provided by operating activities,

Answer 1

The net cash provided by operating activities is $96,000.

Step-by-step explanation:

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

Step 1: Start with the net income of $52,000.

Step 2: Add back depreciation expense of $30,000 since it is a non-cash expense.

Step 3: Adjust for changes in working capital:

• Subtract the increase in accounts payable of $8,000.
• Add the decrease in accounts receivable of $17,000.
• Add the increase in inventories of $5,000.

Net cash provided by operating activities = Net income + Depreciation expense + Changes in working capital = $52,000 + $30,000 - $8,000 + $17,000 + $5,000 = $96,000.

Answer 2

To find the net cash provided by operating activities using the indirect method, start with the company's net income and make adjustments for non-cash expenses and changes in working capital.

Step-by-step explanation:

To find the net cash provided by operating activities using the indirect method, we start with the company's net income and make adjustments for non-cash expenses and changes in working capital.

Here are the steps:

1. Start with net income: $52,000
2. Add non-cash expenses, such as depreciation: +$30,000
3. Adjust for changes in working capital:
   • Accounts payable increased by $8,000, so subtract this change: -$8,000
   • Accounts receivable decreased by $17,000, so add this change: +$17,000
   • Inventories increased by $5,000, so subtract this change: -$5,000

Net cash provided by operating activities = $52,000 + $30,000 - $8,000 + $17,000 - $5,000 = $86,000