Question

Fox Company's worksheet for the preparation of its current annual statement of cash flows included the following: December 31 January 1 Accounts receivable $29,000 $23,000 Allowance for uncollectible accounts 1,000 800 Prepaid rent expense 8,200 12,400 Accounts payable 22,400 19,400 Fox's net income is $150,000. What amount should Fox include as net cash provided by operating activities in the statement of cash flows? Group of answer choices

Answer 1

Answer:

 $151,400

Explanation:

The preparation of the Cash Flows from Operating Activities—Indirect Method is shown below:

Cash flow from Operating activities - Indirect method

Net income $150,000

Adjustment made:

Less: Increase in accounts receivable -$6,000 ($29,000 - $23,000)

Add: Increase in allowance $200 ($1,000 - $800)

Add: Increase in accounts payable $3,000  ($22,400 - $19,400)

Add: Decrease in prepaid rent expense $4,200 ($8,200 - $12,400)

Total of Adjustments $1,400

Net Cash flow from Operating activities         $151,400