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A company's income statement showed the following: net income, $134,000; depreciation expense, $40,000; and gain on sale of plant assets, $14,000. An examination of the company's current assets and current liabilities showed the following changes accounts receivable decreased $11,400; merchandise inventory increased $28,000; prepaid expenses increased $8,200; accounts payable increased $5,400. Calculate the net cash provided or used by operating activities.

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Answer:

the net cash provided by operating activities is $168,600

Explanation:

Cash flow from operating activities

net income,                                                     $134,000

adjust for non-cash items

add depreciation expense,                            $40,000

less gain on sale of plant assets,                    $14,000

adjust for changes in working capital

decrease in accounts receivable                    $11,400

increase in merchandise inventory              ($28,000)

increase in  prepaid expenses                       ($8,200)

increase in accounts payable                          $5,400

net cash provided by operating activities    $168,600                                                                        

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