Castine reports net income of $305,000 for the year ended December 31, Year 2. I

Question

Castine reports net income of $305,000 for the year ended December 31, Year 2. It also reports $93,700 depreciation expense and a $10,000 loss on the sale of equipment. Its comparative balance sheet reveals a $40,200 increase in accounts receivable, a $10,200 decrease in prepaid expenses, a $15,200 increase in accounts payable, a $12,500 decrease in wages payable, and a $100,000 decrease in notes payable. Calculate the new cash provided (used) in operating activities using the indirect method. A.$461,800. B. $371,400. C. $381,400. D. $351,000. E. $361,000.

Explanation / Answer

Castine reports net income of + $305,000
depreciation expense + $93,700
loss on the sale of equipment + $10,000
increase in accounts receivable - $40,200
a decrease in prepaid expenses + $10,200
increase in accounts payable + $15,200
decrease in wages payable - $12,500
decrease in notes payable (Does not count! -- Financing activity)
Cash flows from operating activities: 381,400 (c)

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