Question

Blossom Company reported net income of $1.75 million in 2022. Depreciation for the year was $280,000, accounts receivable decreased $612,500, and accounts payable decreased $490,000. Compute net cash provided by operating activities using the indirect approach. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Answer 1

$2,152,500

Step-by-step explanation:

The preparation of the Cash Flows from Operating Activities—Indirect Method is presented below:

Cash flow from Operating activities - Indirect method

Net income $1,750,000

Adjustment made:

Add : Depreciation expense $280,000

Add: Decrease in accounts receivable $612,500

Less: Decrease in accounts payable -$490,000

Net Cash flow provided by Operating activities $2,152,500