Question

The net income reported on the income statement for the current year was $541000. Depreciation recorded...

The net income reported on the income statement for the current year was $541000. Depreciation recorded on plant assets was $81000. Accounts receivable and inventories increased by $42000 and $17000, respectively. Prepaid expenses and accounts payable decreased by $2000 and $34000, respectively. How much cash was provided by operating activities?

510000

531000

493000

713000

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Answer #1

Calculation of cash provided by operating activities

Particulars $
Net income 541,000
Add depreciation 81,000
Less increase in account receivables (42,000)
Less increase in inventory (17,000)
Add decrease in prepaid expense 2,000
Less decrease in account payable (34,000)
Cash provided by operating activities 531,000

Cash provided by operating activities is $531,000.

Option $531,000 is CORRECT.

The above calculations clearly show that the other options are incorrect.

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