MacDonald Inc. reported net income of $300,000 for 1996. Changes occurred in several balance sheet accounts as follows:
Equipment $25,000 increase -
Accumulated depreciation $40,000 increase
Note payable $30,000 increase -
Additional information:
During 1996, MacDonald sold equipment costing $25,000, with accumulated depreciation of $12,000, for a gain of $5,000.
In December 1996, MacDonald purchased equipment costing $50,000 with $20,000 cash and a 12% note payable of $30,000.
Depreciation expense for the year was $52,000.
In MacDonald's 1996 statement of cash flows, net cash provided by operating activities is ________.
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A. B. C. D. E.A
To calculate cash flows from operating activities, net income will be adjusted for noncash items and working capital. Depreciation of $52,000 is added back to net income of $300,000 and the gain on sale of equipment of $5,000 is subtracted from net income. Therefore, the net cash inflow from operating activities is
$347,000.