The net income for the year ended December 31, 2015, for Oliva Company was $1,90

Question

The net income for the year ended December 31, 2015, for Oliva Company was $1,900,000. Additional information is as follows:

Depreciation on plant assets $600,000

Amortization of leasehold improvements 340,000

Provision for doubtful accounts on short-term receivables increase 120,000

Provision for doubtful accounts on long-term receivables increase 100,000

Interest paid on short-term borrowings 80,000

Interest paid on long-term borrowings 60,000

Based solely on the information given above, what should be the net cash provided by operating activities in the statement of cash flows for the year ended December 31, 2015?

*answer is $3,060,000, I'm just not sure how to get it :)

Explanation / Answer

Cash flows from interest received and paid should each be disclosed separately. Cash flows arising from interest paid and interest received in the case of a financial enterprise should be classified as cash flows arising from operating activities. In the case of other enterprises, cash flows arising from interest paid should be classified as cash flows from financing activities while interest received should be classified as cash flows from investing activities.

Net Income $    19,00,000 Add Back non-cash expenses Depreciation $    6,00,000 Amortization of leasehold improvements $    3,40,000 Provision for doubtful accounts on short-term receivables increase $    1,20,000 Provision for doubtful accounts on long-term receivables increase $    1,00,000 Interest paid on short-term borrowings $        80,000 Interest paid on long-term borrowings $        60,000 $    13,00,000 Cash flow from operating activities $    32,00,000

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