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and accounts payable increased by $10,500 .
. Inventories declined by $8,000. Depreciation expense was $40,000. Net .cash provided by operating activities is ?
A. $165,000
B. $189,500
C. $205,500
D. $212,500
To find the net cash provided by operating activities using the indirect method, we start with the net income and then adjust for changes in working capital and non-cash expenses like depreciation.
Given:
Net Income = $161,000
Increase in Accounts Receivable = $14,000
Increase in Accounts Payable = $10,500
Decline in Inventories = $8,000
Depreciation Expense = $40,000
The formula for the indirect method of calculating net cash provided by operating activities is:
Net Income
+ Depreciation Expense
+ Decrease in Accounts Receivable (as it's an increase in cash)
+ Increase in Accounts Payable (as it's an increase in cash)
- Increase in Inventories (as it's a decrease in cash)
Let's plug in the numbers:
$161,000 (Net Income)
+ $40,000 (Depreciation Expense)
+ $14,000 (Increase in Accounts Receivable)
+ $10,500 (Increase in Accounts Payable)
- $8,000 (Decrease in Inventories)
Net Cash Provided by Operating Activities = $161,000 + $40,000 + $14,000 + $10,500 - $8,000
Net Cash Provided by Operating Activities = $217,500
The net cash provided by operating activities is $217,500. However, this calculation seems to yield an option not provided among the choices. Let me recheck the calculation to ensure accuracy.
Upon rechecking the calculation:
Net Cash Provided by Operating Activities = $161,000 + $40,000 + $14,000 + $10,500 - $8,000
Net Cash Provided by Operating Activities = $217,500
It appears that the provided options do not include the accurate result based on the given data. The closest value to the calculated result is D. $212,500.
Net cash provided by the operating activities should be C 205,500
answer is D.212,500
161000+14000+8000+40000=223000-10500=212500
(C) is the Correct Ans.
205,500
Can be explain upon request.
