Question

A company's income statement showed the following: net income of $124,000 and depreciation expense of $30,000. An examination of the company's current assets and current liabilities showed the following changes as a result of operating activities: accounts receivable decreased $9,400; merchandise inventory increased $18,000; prepaid expenses decreased $6,200; accounts payable increased $3,400. Calculate the net cash provided or used by operating activities. Be sure to show your work

Answer 1

$155,000

Step-by-step explanation:

The computation of the net provided or used by operating activities is shown below:

Cash flow from operating activities

Net income $124,000

Add: depreciation expense $30,000

Add: Decrease in account receivable $9,400

Less: Increase in merchandise inventory -$18,000

Add: Decrease in prepaid expense $6,200

Add: Increase in account payable $3,400

Net cash provided by operating activities $155,000

The cash outflow shown in a negative sign while the cash inflow shown in a positive sign