Question

Royal Corporation uses the indirect method of computing net cash flow from operating activities and reported the following for 2018: Accounts receivable decreased by $10,300, merchandise inventory increased by $15,300, accounts payable decreased by $4,000, and income taxes payable increased by $18,800. If Royal Corporation reported net income for 2018 of $157,800 (including $34,800 of depreciation expense), net cash flow from operating activities for 2018 is:

Answer 1

$202400

Step-by-step explanation:

The net cash flow from operating activities is net income plus depreciation plus the decrease in accounts receivable,minus the increase in inventory merchandise minus the decrease in accounts payable as well as the increase in income tax payable as shown below:

cash flow from operating activities=$157,800+$34,800+$10,300-$15,300-$4000+$18,800=$202400

The reason for adding increase in taxes payable is that the cash is saved from being used in paying taxes