A company had net income of $230,000. Depreciation expense is $26,000. During th

Question

A company had net income of $230,000. Depreciation expense is $26,000. During the year, Accounts Receivable and Inventory increased $15,000 and $40,000, respectively. Prepaid Expenses and Accounts Payable decreased by $2,000 and $4,000, respectively. There was also a loss on the sale of equipment of $3,000. How much cash was provided by operating activities?

a. $196,000

b. $202,000                                                                                                                                                                                 

c. $276,000

d. $288,000

Explanation / Answer

Hi,

Please find the answer as follows:

Net Income = 230000

+ Depreciation Expense = 26000

+ Loss on Sale of Equipment = 3000

+ Decrease in Prepaid Expenses = 2000

- Increase in Inventory = 15000

- Increase in Accounts Receivables = 40000

- Decrease in Accounts Payables = 4000

Net Cash from Operating Activities =202000

Answer is Option B (202000)

Thanks.

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