Question

Sheridan Company had net income for 2021 of $3050000. Additional information is as follows: Depreciation of plant assets $1192000 Amortization of intangibles 248000 Increase in accounts receivable 428000 Increase in accounts payable 543000 Sheridan's net cash provided by operating activities for 2021 was $4375000. $2725000. $4605000. $4490000.

Answer 1

Answer:

$4605000

Explanation:

The cash flow provided by operating activities is computed by starting with the net income and adjusting for non-cash expenses such as depreciation and amortization as well as the impact of working capital as shown by the formula below:

operating cash flows=net income+depreciation+amortization-increase in accounts receivable+increase in accounts payable

increase in accounts receivable deprives the business of cash , hence, it is treated as an ouflow (deducted) and an  increase in accounts payable has an opposite impact.

operating cash flows=$3050000+$1192000+$248000-$428000+$543000

operating cash flows=$ 4,605,000