Net income reported for the current year was $200,000.Depreciation expense was $35,000.During the year, Accounts Receivable and Inventory increased $18,000 and $26,000, respectively.Prepaid Expenses and Accounts Payable decreased $4,000 and $9,000, respectively.There was also a loss on the sale of equipment of $6,000.Using the indirect method, how much cash was provided by operating activities?
A)$182,000
B)$192,000
C)$210,000
D)$244,000

Question

Quizplus · Accepted Answer

To calculate cash provided by operating activities using the indirect method, start with net income ($200,000), add back non-cash expenses like depreciation ($35,000), and adjust for changes in working capital: subtract increases in Accounts Receivable ($18,000) and Inventory ($26,000), add decreases in Prepaid Expenses ($4,000) and Accounts Payable ($9,000), and add back the loss on sale of equipment ($6,000). The calculation is: $200,000 + $35,000 - $18,000 - $26,000 + $4,000 + $9,000 + $6,000 = $192,000.

Net Income Reported for the Current Year Was $200,000