Amy Corporation's income statement showed the following: net income, $72,000;depreciation expense, $8,000; and gain on sale of plant assets, $6,000. An examination of the company's current assets and current liabilities showed the following changes as a result of operating activities: accounts receivable decreased $5,700; merchandiseinventory increased $8,000; prepaid expenses decreased $2,100; accounts payable increased $1,700. Calculate the net cash provided or used) by operating activities.
A) $71,800.
B) $75,500.
C) $82,500.
D) $68,800.
E) $66,500.

Question

Quizplus · Accepted Answer

To calculate net cash provided by operating activities, start with net income ($72,000), add back non-cash expenses like depreciation ($8,000), and adjust for changes in working capital: decrease in accounts receivable ($5,700), increase in inventory (-$8,000), decrease in prepaid expenses ($2,100), and increase in accounts payable ($1,700). Also, subtract the gain on sale of plant assets ($6,000). The calculation is: $72,000 + $8,000 - $6,000 + $5,700 - $8,000 + $2,100 + $1,700 = $75,500.

Amy Corporation's Income Statement Showed the Following: Net Income, $72,000;depreciation