Panda Cafe earned net income of $ 69 comma 000 after deducting depreciation of $ 3 comma 000 and all other expenses. Current assets decreased by $ 2 comma 000 , and current liabilities increased by $ 8 comma 000. How much was Panda Cafe's cash provided by operating activities (indirect method) ?

Question

Kaylin Solomon

Business

23 May, 16:54

Panda Cafe earned net income of $ 69 comma 000 after deducting depreciation of $ 3 comma 000 and all other expenses. Current assets decreased by $ 2 comma 000 , and current liabilities increased by $ 8 comma 000. How much was Panda Cafe's cash provided by operating activities (indirect method) ?

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Answers (1)

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Ariana Shea · Answer 1

Panda Cafe's cash provided by operating activities is 82.000

Explanation:

The indirect method involves the adjustment of net income with changes in balance sheet accounts to arrive at the amount of cash generated by operating activities.

It depends on the account if it is added or subtracted to net income. In this case, all of them are added to the net income.

Net income 69.000

Adjustment to reconcile the net income to cash

+ Depreciation expense 3.000

+ Increase in current liabilities 8.000

+ Current assets decreased 2.000

Net cash 82.000