5) A company\'s income statement showed the following: net income, $140,000; dep

Question

5) A company's income statement showed the following: net income, $140,000; depreciation expense, $38,000; and gain on sale of plant assets, $22,000. An examination of the company's current assets and current liabilities showed the following changes as a result of operating activities: accounts receivable decreased $11,000; merchandise inventory increased $26,000; prepaid expenses decreased $7,800; accounts payable increased $5,000. Calculate the net cash provided or used by operating activities.

a) $153,800.
b) $179,800.
c) -$158,600.
d) $151,800.
e) -$175,800.

Explanation / Answer

Net income +140,000 Depreciation expense +38,000 Gain on sale of plant assets -22,000 Decrease in A/R +11,000 Increase in Merchandise -26,000 Decrease in prepaid expenses +7,800 Increase in A/P +5,000 Cash flow from operating activities: 153,800 Thus, the correct answer is a) $153,800.

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