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A company's income statement showed the following: net income, $119,000; depreciation expense, $32,500; and gain on sale of plant assets, $6,500
A company's income statement showed the following: net income, $119,000; depreciation expense, $32,500; and gain on sale of plant assets, $6,500. An examination of the company's current assets and current liabilities showed the following changes accounts receivable decreased $9,900; merchandise inventory increased $20,500; prepaid expenses increased $6,700; accounts payable increased $3,900. Calculate the net cash provided or used by operating activities.
Expert Solution
| Net cash flow from operating activities | |||
| Net income | 119,000 | ||
| Adjustments to Reconcile Net Income to Net Cash Provided by operations:- | |||
| Add: Depreciation expense | 32,500 | ||
| Less: Gain on sale of Plant Assets | -6,500 | ||
| Changes in Working Capital:- | |||
| Add: Decrease in accounts receivable | 9,900 | ||
| Less: Increase in merchandise inventory | -20,500 | ||
| Less: Increase in Prepaid Expenses | -6,700 | ||
| Add: Increase in accounts payable | 3,900 | ||
| 12,600 | |||
| Net cash provided/(used) by operating activities | 131,600 | ||
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