Question

During 2018, Orton Company earned net income of $494,000 which included depreciation expense of $78,000. In addition, the company experienced the following changes in the account balances listed below:

                        Increases                                                      Decreases

Accounts payable              $45,000            Accounts receivable                     $12,000

Inventory                               36,000            Accrued liabilities                             24,000

                                                                        Prepaid insurance                           33,000

15.      Based upon this information what amount will be shown for net cash provided by operating activities for 2018?

Answer 1

Answer:

Orton Company

Statement of cash flow (Partial)

Cash flow from operating activities:
Net income	$494,000
Adjustment for:
Depreciation expenses	$78,000
Increase in accounts payable	$45,000
Increase in inventory	($36,000)
Decrease in accounts receivable	$12,000
Decrease in accrued liabilities	($24,000)
Decrease in prepaid insurance	$33,000
Net cash flow from operating activities		$602,000

Based upon this information $602,000 will be shown for net cash provided by operating activities for 2018.