Question

Krauss Company's income statement for the year ended December 31, 2017, contained the following condensed information.
Service revenue $845,540
Operating expenses (excluding depreciation). $625,700
Depreciation expense 57,390
Loss on sale of equipment 29,170 712,260
Income before income taxes 133,280
Income tax expense 40,190
Net income $93,090
Krauss's balance sheet contained the following comparative data at December 31.
2017 2016
Accounts receivable $36,010 $59,510
Accounts payable 45,780 31,020
Income taxes payable 4,070 8,680
(Accounts payable pertains to operating expenses.)
Using the direct method, what is the Net Cash provided by Operating Activities?

Answer 1

Answer:

Net Cash provided by Operating Activities 146,000

Explanation:

using the income statement values and the balance sheet beginning and ending we can solve for the cash collection and disbursements:

beginning

+ net income figure:

total amount to collect/pay

less ending

actually paid/collected

collected from customer:

36,010 + 845,540 - 59,510 = 822,040

payment of expenses:

45,780 + 625,700 - 31,020 = 640,460‬

tax paid:

4,070 + 40,190 - 8,680 =         35,580‬

cash from operation

822,040 - 640,460 - 35,580 = 146,000