Question

Changes in Current Operating Assets and Liabilities—Indirect Method

Covington Corporation's comparative balance sheet for current assets and liabilities was as follows:

Dec. 31, 20Y2 Dec. 31, 20Y1
Accounts receivable $28,200 $27,300
Inventory 59,500 60,200
Accounts payable 18,400 17,000
Dividends payable 20,000 19,000
Adjust net income of $88,300 for changes in operating assets and liabilities to arrive at net cash flow from operating activities.
$fill in the blank 1

Answer 1

The Net cash provided by operating activities is:$90,500.

Net cash provided by operating activities

Cash flows from operating activities

Net Income     $88,300

Adjustments to reconcile net income to      

Net cash provided by operating activities:      

(Increase) Decrease in Current Assets:      

Accounts Receivables    ($900)

($28,200 -$27,300)

Inventory      $700

($59,500-$60,200)

Increase (Decrease) in Current Liabilities:    

Accounts Payable     $1,400

($18,400 -$17,000)

Dividends Payable $1,000

Net cash provided by operating activities $90,500

Therefore the Net cash provided by operating activities is:$90,500.

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