The net income reported on the income statement for the current year was $100,000. Depreciation recorded on plant assets was $25,000.Accounts receivable and inventories decreased by $5,000 and $15,000,respectively.

Prepaid expenses and accounts payable increased by $500 and $4,000, respectively.


Using the indirect method, how much would be reported for net cash flows from operating activities in the statement of cash flows?

a. $130,000

b. $148,500

c. $141,500

d. $98,500

Answer by Guest

Answer:

b. $148,500

Explanation:

CASH FLOWS FROM OPERATING ACTIVITIES  $

Net Income     100,000

Adjustments to reconcile net income to      

net cash provided by operating activities:      

Depreciation on Fixed Assets    25,000  

(Increase) Decrease in Current Assets:      

Accounts Receivables    5,000

Inventory      15,000

Prepaid Expenses     (500)

Increase (Decrease) in Current Liabilities:    

Accounts Payable     4,000

NET CASH PROVIDED BY OPERATING ACTIVITIES 148,500

If your question is not fully disclosed, then try using the search on the site and find other answers on the subject Business.