Consider the following: Net income, $285,000 Depreciation Expense $33,000 Increase in accounts receivable, $12,000 Decrease in...

Consider the following: Net income, $285,000 Depreciation Expense $33,000 Increase in accounts receivable, $12,000 Decrease in merchandise inventory, $60,000 Decrease in accounts payable, $24,000 Increase in income taxes payable, $9,000 Using the Indirect Method, the Net Cash provided by Operating Activities was: Group of answer choices $351,000 $303,000 $318,000 $270,000

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Expert Solution

Answer: $351,000

Partial Statement of Cashflows
Cash Flows from Operating Activities:
Net Income		$285,000
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation expense	$33,000
Increase in accounts receivable	($12,000)
Decrease in merchandise inventory	$60,000
Decrease in accounts payable	($24,000)
Increase in income tax payable	$9,000
		$66,000
Net Cash Provided by Operating Activities		$351,000

Note:

1. Depreciation expense: As depreciation expense is a non-cash expense, it has to be added back to the net income.

2. Increase in current assets is treated as a cash outflow

3. Decrease in current assets is treated as a cash inflow

4. Increase in current liability is treated as a cash inflow

5. Decrease in current liability is treated as a cash outflow

ekkarill92 answered 10 months ago

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