A company\'s income statement showed the following: net income, $126,000; deprec

Question

A company's income statement showed the following: net income, $126,000; depreciation expense, $37,000; and gain on sale of plant assets, $13,000. An examination of the company's current assets and current liabilities showed the following changes as a result of operating activities: accounts receivable decreased $9,500; merchandise inventory increased $17,500; prepaid expenses decreased $6,900; accounts payable increased $3,400. Calculate the net cash provided or used by operating activities.

a)$152,300.

b)$64,500.

c)$213,300.

d)$119,500.

e) $138,600.

question 2

Given the following information, determine the amount of cash flows from investing and financing activities.

Cash used by investing activities, $35,000;
Cash used by financing activities, $61,000.

Cash provided by investing activities, $16,000;
Cash provided by financing activities, $80,000.

Cash used by investing activities, $16,000;
Cash used by financing activities, $80,000.

Cash provided by investing activities, $35,000;
Cash provided by financing activities, $61,000.

Cash provided by investing activities, $35,000;
Cash provided by financing activities, $80,000.

  Net Income $58,000   Loss on sale of plant assets 19,000   Cash received from sale of plant assets 35,000   Cash received from issuing stock 80,000   Increase in income taxes payable 120,000

Explanation / Answer

1. Cash flows from operating activities = Net income +  depreciation expense - gain on sale of plant assets - merchandise inventory increased+ accounts receivable decreased +  prepaid expenses decreased + accounts payable increased

= 126000 + 37000 - 13000 - 17500 + 9500 + 6900 + 3400 = $152300

So, a) $152300 is the right answer

2. Cash flow from operating activities =  Cash received from sale of plant assets = $35000

Cash flow from financing activities =   Cash received from issuing stock = $80000

So, the right answer is:

Cash provided by investing activities, $35,000;
Cash provided by financing activities, $80,000

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