Question

A company's income statement showed the following: net income, $135,400; depreciation expense, $32,700, and gain on sale of plant assets, $15,350. An examination of the company's current assets and current liabilities showed the following changes as a result of operating activities: accounts receivable decreased $10,300; merchandise inventory increased $19,800; prepaid expenses decreased $7,100; accounts payable increased $4,000. Calculate the net cash provided or used by operating activities.

Answer 1

• All working forms part of the answer

No.	Conceptual Notes
1	Cash Flow Statement reflects the Cash Inflows and Outflows during a period of time.
2	Effects of Non - Cash Transaction are adjusted from Net Income.
3	Depreciation Expense, Amortisation expenses are Added back to Net Income in Cash Flow Statement.
4	Decrease in Current Assets OR Increase in Current Liabilities are ADDED to Net Income
5	Increase in Current Assets OR Decrease in Current Liabilities are DEDUCTED from Net Income

• Cash Flow

Statement of Cash Flows - Partial
Cash flows from Operating activities
Net Income		$             135,400
Adjustments to reconcile net cash provided by Operating activities
Depreciation expense	$                       32,700
Gain on Sale of Plant Assets	$                    (15,350)
Decreased in Accounts receivables	$                       10,300
Increase in Merchandise Inventory	$                    (19,800)
Decrease in Prepaid expenses	$                         7,100
Increase in accounts payable	$                         4,000
		$                18,950
Net Cash provided by Operating activities		$             154,350 = Answer

• Answer: Net Cash provided by Operating activities = $ 154,350