Question

A company's income statement showed the following: net income, $134,000; depreciation expense, $30,000; and gain on sale of plant assets, $4,000. An examination of the company's current assets and current liabilities showed the following changes as a result of operating activities: accounts receivable decreased $9400; merchandise inventory increased $18,000; prepaid expenses increased $6,200; accounts payable increased $3,400. Calculate the net cash provided or used by operating activities.

A. $141,000.
B. $96,600.
C. $156,60o.
D. $88,600.
E. $148.600.

Answer 1

E. $148,600

Step-by-step explanation:

Cash flow from operating activities.

Net income. $134,000

Add: Depreciation. $30,000

Less: Gain on sale ($4,000)

Changes in working

Capital

Add: decrease in

Accounts receivable $9,400

Less: increase in

Merchandise inv. ($18,000)

Less: increase in

Prepaid expenses ($6,200)

Add: increase in

Accounts payable $3,400 ($14,600)

Net cash provided used by $148,600

Operating activities