Question

A company's 2013 year-end balance sheet included the following: Jan. 1 Dec. 31 Accounts Receivable $80,000 $100,000Inventory $60,000 $70,000Prepaid Expenses $100,000 $75,000Accounts Payable $120,000 $100,000 Deferred Revenue $65,000 $95,000 The company's net cash from operating activities on its 2013 Statement of Cash Flows is $200,000. Current year depreciation expense is $25,000. What amount should the company report as net income for 2013? A. $130,000.B. $170,000.C. $175,000.D. $230,000.

Answer 1

Answer:

B. $170,000.

Explanation:

X company

statement of cash flow

For the year ended

Net income (balancing) (Note - 1)                                   $170,000

Cash flow from operating activities                      

Depreciation expense                                   $25,000

Increase in account receivable                     $(20,000)

Increase in inventory                                     $(10,000)

decrease in Prepaid Expenses                     $25,000

Decrease in Accounts Payable                     $(20,000)

Increase in Deferred Revenue                      $30,000

Cash flow                                                                                $30,000

Net cash flow from operating activities                              $200,000

Note 1:

Net cash flow from operating activities - Total changes in working capital=                        $200,000-$30,000 = $170,000.