Here's another one. Obviously, AP decreased but the answers says that it increased. So what is the right answer, A or D?
Lino Co.’s worksheet for the preparation of its statement of cash flows included the following:
December 31 January 1
Accounts receivable $29,000 $23,000
Allowance for uncollectible accounts 1,000 800
Prepaid rent expense 8,200 12,400
Accounts payable 22,400 25,400
Lino’s net income is $150,000. What amount should Lino include as net cash provided by operating activities in the statement of cash flows?
A.
$151,400
B.
$151,000
C.
$148,600
Incorrect D.
$145,400
You answered D. The correct answer is A.
The $151,400 amount is calculated as follows:
Net income $150,000
Increase in accounts receivable ($23,000 – $29,000) (6,000)
Increase in allowance for uncollectible accounts
($800 – $1,000) 200
Decrease in prepaid rent expense ($12,400 – $8,200) 4,200
Increase in accounts payable ($25,400 – $22,400) 3,000
Cash provided by operating activities $151,400
Reg 73, redo April 2015
FAR Feb 2015
AUD June 2015
BEC Oct 2015
CPA, the marathon of all marathons...I can do this.
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