A company had net income of $210,000. depreciation expense is $27,000. during the year, accounts receivable and inventory increased $17,000 and $42,000, respectively. prepaid expenses and accounts payable decreased $5,000 and $6,000, respectively. there was also a loss on the sale of equipment of $2,000. how much cash was provided by operating activities

$179,000

Explanation:

Prepare an Operating Cash flow Section of the Statement of Cash flow.

Cash flow from Operating Activities

net income                                                      $210,000

Adjustment of Non-Cash Items :

depreciation                                                     $27,000

loss on the sale of equipment of                      $2,000

Adjustment of Working Capital Items :

Increase in Accounts Receivable                   ($17,000)

Increase in Inventory                                     ($42,000)

Decrease in Prepaid Expense                          $5,000

Decrease in Accounts Payable                       ($6,000)

Net Cash Flow from Operating Activities     $179,000

$169,000

Explanation:

Operating activities

Net income $210,000

Add depreciation expenses $27,000

Balance $237,000

Less: increased in account receivable $17,000

Less increased in inventory $42,000

Balance $178,000

Less : prepaid expense $5,000

Less: accounts payable decreased $6,000

Balance $167,000

Add loss on the sale of equipment $2,000

Operating expenses $169,000

Therefore the amount of cash that was provided by operating activities is $169,000

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