Question

The net income reported on the income statement for the current year was $245,000. Depreciation was $40,000. Account receivable and inventories decreased by $12,000 and $35,000, respectively. Prepaid expenses and accounts payable increased, respectively, by $1,000 and $8,000. How much cash was provided by operating activities

Answer 1

$339,000

Step-by-step explanation:

Computation of operating activity as is as seen below;

= Net income + Depreciation + Accounts receivable + Inventories decrease - Prepaid expenses + Accounts payable increase

= $245,000 + $40,000 + $12,000 + $35,000 - $1,000 + $8,000

= $339,000

Therefore, the sum of $339,000 was provided as cash for operating activities.