The current sections of Whispering Winds Corp.'s balance sheets at December 31, 2019 and 2020, are presented here. Whispering Winds's net income for 2020 was $152,000. Depreciation expense was $24,900. 2019 2018 Current assets Cash $106,600 $99,100 Accounts receivable 109,700 77,900 Inventory 157,000 171,900 Prepaid expenses 26,700 25,100 Total current assets $400,000 $374,000 Current liabilities Accrued expenses payable $14,600 $8,400 Accounts payable 85,500 95,100 Total current liabilities $100,100 $103,500 Prepare the net cash provided by operating activities section of the company's statement of cash flows for the year ended December 31, 2020, using the indirect method.

Question

Beckham Robinson

Business

16 June, 14:17

The current sections of Whispering Winds Corp.'s balance sheets at December 31, 2019 and 2020, are presented here. Whispering Winds's net income for 2020 was $152,000. Depreciation expense was $24,900. 2019 2018 Current assets Cash $106,600 $99,100 Accounts receivable 109,700 77,900 Inventory 157,000 171,900 Prepaid expenses 26,700 25,100 Total current assets $400,000 $374,000 Current liabilities Accrued expenses payable $14,600 $8,400 Accounts payable 85,500 95,100 Total current liabilities $100,100 $103,500 Prepare the net cash provided by operating activities section of the company's statement of cash flows for the year ended December 31, 2020, using the indirect method.

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Deangelo Lamb · Answer 1

The amount of cash provided by operating activities is $155,000

Explanation:

The net cash provided by operating activities is shown below by the cash flow statement extract:

Net income $152,000

depreciation expense $24,900

increase in accounts receivable ($109700-$77900) ($31,800)

Decrease in inventory ($171,900-$157,000) $14,900

increase in prepaid expenses ($26,700-$25,100) ($1,600)

increase in accrued expenses ($14,600-$8400) $6,200

decrease in accounts payable ($95,100-$85,500) ($9,600)

net cash provided by operating activities $155,000

Note:

An increase in liability means depriving the other party some cash, hence it is positive and vice versa.