Becker Inc. reported net income of $560,000 on its income statement for 2020. Depreciation expense for...

Becker Inc. reported net income of $560,000 on its income statement for 2020. Depreciation expense for the year was $63,000. Over the course of the year, Becker also experienced the following changes in account balances:

Accounts payable: $12,000 increase

Inventory: $18,000 increase

Accounts receivable: $9,000 decrease

Accrued liabilities: $19,000 decrease

Prepaid insurance: $7,000 decrease

Determine net cash provided by operating activities for 2020.

Expert Solution

Solution

Net cash provided by operating activities for 2020= $614,000

Working

Becker Inc.
Statement of Cash Flows
For the Year Ended December 31, 2020
Cash flows from operating activities:
Net income		$ 560,000.00
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	$ 63,000.00
Decrease in prepaid insurance	$ 7,000.00
Decease in accounts receivables	$ 9,000.00
Increase in inventory	$ (18,000.00)
Increase in accounts payable	$ 12,000.00
Decrease in Accrued liability	$ (19,000.00)
		$ 54,000.00
Net cash from Operating Activities		$ 614,000.00

.General notes for cash flow
Cash is increased when Current liability increase or Current asset Decrease.
Cash is Decreased when Current liability Decrease or Current asset Increase.
Depreciation or loss on sale of any asset is a non cash expense hence it will be added to net income to get operating cash
Profit on sale of asset or investment is a non cash profit and hence will be deducted from operating income.

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