Question

A company's income statement showed the following: net income, $134,000; depreciation expense, $40,000; and gain on sale of plant assets, $14,000. An examination of the company's current assets and current liabilities showed the following changes as a result of operating activities: accounts receivable decreased $11,400; merchandise inventory increased $28,000; prepaid expenses increased $8,200; accounts payable increased $5,400. Calculate the net cash provided or used by operating activities.

Multiple Choice

$140,600.

$183,000.

$157,000.

$155,000.

$161,800.

Answer 1

$140,600.

Working:

Cash flow from operating Activities:
Net Income				$       1,34,000
Depreciation expenses				40,000
Gain on sale of plant assets				-14,000
Adjustment of Current Assets and current Liabilities:
Accounts Receivable decreased				11,400
Merchandise Inventory increased				-28,000
Perpaid Expenses increased				-8,200
Accounts Payable increased				5,400
Net Cash Provided by Operating Activities				1,40,600
Note:
Depreciation is non cash expenses . So it is added back.
Gain on sale of plant assets is not related with the operation.So it is added back.