Triton Corp reported net income of $207,200, including depreciation expense of $63,000. The company sold investments for $8,400 that had a cost of $25,200. Accounts receivable decreased $35,000 and accounts payable increased $32,200. What amount did Triton report as net cash provided by operating activities? (5 marks)
Answers
Answer:
Explanation:
Net income: 207.200
(+) Depreciation 63.000
(+)Account receivable 35.000
=Cash net 305200
Answer:
Explanation:
The starting point for calculating cash flow from operating activities is net income. The next step is to add back the non-cash depreciation expense of $63,000. It has to be added back since it was subtracted when net income was calculated, but it does not involve a cash outflow. The next step is to add back the loss on the investment sale of $16,800. This has to be added back since it was subtracted when net income was calculated, but it does not involve a cash outflow. The decrease in accounts receivable is added since cash collections exceeded credit sales. This means net income understates cash provided by operating activities. The increase in accounts payable is added since inventory purchases exceeded payments for inventory. This means that cost of goods sold overstates cash used to purchase inventory, which means net income understates cash provided by operating activities.
The final result is a net inflow from operating activities of $354,200 ($207,200 + $63,000 + $16,800 + $35,000 + $32,200)