Question

50) Majorn Auto Parts Store had net income of $81.000 for the year just ended. Majorn co the following additional information to prepare its statement of cash flows for the you car just ended. Majorn collected Increase in accounts receivable Decrease in inventory $ 102,000 Decrease in accounts payable $ 18,000 Increase in retained earnings $ 35,000 $ 29,000 Cash received from sale of building $ 215,000 Gain on sale of building $ 47,000 Depreciation expense $ 32,000 indirect method to prepare its statement of cash flows. What is Majorn's net cash provided by (used in) operating activities? A) $41,000 B) $(53,000) C) $185,000 D) $279,000

Answer 1

Ans.	Option B    $(53,000)
	Particulars	Amount	Amount
	Cash flow from operating activities:
	Net income		$81,000
	Non cash/operating expenses / income:
	Add: Depreciation expense	$32,000
	Less: Gain on sale of building	-$47,000
	Total non cash expenses		-$15,000
	Operating profit before working capital changes		$66,000
	Changes in current assets and liabilities
	Less: Increase in accounts receivables	-$102,000
	Add: Decrease in inventory	$18,000
	Less: Decrease in accounts payable	-$35,000	-$119,000
	Net cash used by operating activities		-$53,000
	*Increase in current liabilities and Decrease in current assets other than cash is added to Net Income.
	*Decrease in current liabilities and Increase in current assets other than cash is subtracted from Net Income.
	*Non cash & Non operating expenses are added to Net income.
	*Non cash & Non operating income are deducted from Net income.