Question

Scranton, Inc. reports net income of $232,000 for the year ended December 31. It also reports $88,600 depreciation expense and a $5,100 gain on the sale of equipment. Its comparative balance sheet reveals a $35,900 decrease in accounts receivable, a $15,950 increase in accounts payable, and a $12,650 decrease in wages payable. Calculate the cash provided (used) in operating activities using the indirect method.

Answer 1

Answer:

Cash flow form operating activities  $359,800

Explanation:

                                                                       $

Net income                                                   232,000

Add depreciation expense                        88,600

Add Decrease in receivable                          35,900

Increase in account payable                          15,950

Decrease in wages                                        ( 12,650)

Cash flow form operating activities             359,800

Increase in payable and decrease in receivable represent cash inflow while decrease in payable and increase in receivables represent cash outflow