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30 August, 04:30

Lindsay Corporation had net income for 2018 of $3,000,000. Additional information is as follows: Depreciation of plant assets $1,200,000 Amortization of intangibles 240,000 Increase in accounts receivable 420,000 Increase in accounts payable 540,000 Lindsay's net cash provided by operating activities for 2018 was:

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  1. 30 August, 04:43
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    Net cash provided by operating activities for 2018 was $4,560,000

    Explanation:

    The net cash provided by operating activities can be computed by preparing the operating activities of the statement of cash flow as shown below:

    Net income for the year $3,000,000

    add depreciation $1,200,000

    add amortization $240,000

    deduct increase in accounts receivable ($420,000)

    add increase in accounts payable $540,000

    net cash provided by operations $4,560,000

    The cash provided by operating activities is $4,560,000

    The rationale for deducting increase in accounts receivable is that the increase deprived Lindsay corporation cash of $420,000.
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