A company\'s income statement showed the following: net income, $116,000; deprec

Question

A company's income statement showed the following: net income, $116,000; depreciation expense, $31,000; and gain on sale of plant assets, $5,000. An examination of the company's current assets and current liabilities showed the following changes as a result of operating activities: accounts receivable decreased $9,600; merchandise inventory increased $19,000; prepaid expenses increased $6,400; accounts payable increased $3,600. Calculate the net cash provided or used by operating activities.

$168,600.

$129,800.

$140,600.

$142,600.

$147,400.

Explanation / Answer

Cash Flow from Operating Activities

= Net income + Noncash Expenses( Depreciation Expense- (abnormal gain on sale of asset + Changes in Working Capital

(116,000 + 31,000 - 5,000 )

= 142,000 + 9,600 + 6,400 + 3,600 – 19,000= 142,600)

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