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Alpha Company had the following account balances for 2018: Dec. 31 Jan. 1 Accounts receivable $ 41,500 $ 32,500 Accounts payable 54,000 59,000 Alpha reported net income of $240,000 for 2018. Assuming no other changes in current account balances, what is the amount of net cash provided by operating activities for 2018 reported in the statement of cash flows?

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Answer:

$226,000

Explanation:

The preparation of the Cash Flows from Operating Activities—Indirect Method is shown below:

Cash flow from Operating activities - Indirect method

Net income $240,000

Adjustment made:

Less: Increase in accounts receivable - $9000 ($41,500 -$32,500)

Less: Decrease in accounts payable -$5,000 ($54,000 - $59,000)

Total of Adjustments - $14,000

Net Cash flow from Operating activities            $226,000

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