Frazier Company reported current net income of $161,000. During the year, accounts receivable increased by $14,000

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

161000+14000+8000+40000=223000-10500=212500 answer Therefore answer is D.$ 212,500

Option C correct.Net income.161000+Depreciation40000+Inventory.8000+Payables.10500+Receivable.-14000=Cash generated from operating activity205500

(C) is the Correct Ans.

 

205,500

 

Can be explain upon request.