Answer:
Net cash provided by operating activities is 149.000
Explanation:
The indirect method involves the adjustment of net income with changes in balance sheet accounts to arrive at the amount of cash generated by operating activities.
First we have to see if each account increase o decrease by resting value of year 1 to the year 2
Decrease/ Increase =year 2 - year 1
For example Accounts payable
year 1 $5,000
year 2 $4,000
Accounts payable decrease 1000 ($4,000-$5,000 )
Once we have this information we make the adjustments.
It depends on the account if it is added or subtracted to net income. Below you will find the added account with a plus (+) and the subtracted ones with a minus (-)
Notice the amounts of any decreases are in parentheses.
Net income 120.000
Adjustment to reconcile the net income to cash
- Decrease in accounts payable (1.000)
+ Depreciation expense 20000
+ Decrease Prepaid expenses 5.000
+ Decrease in Fixed assets 32.400
Net cash 149.000
