Question

: Metlock, Inc. reported net income of $0.80 million in 2022. Depreciation for the year was $128,000, accounts receivable decreased $280,000, and accounts payable decreased $224,000. Compute net cash provided by operating activities using the indirect approach. (Show amounts that decrease cash flow with either a - sign e.g.-15,000 or in parenthesis eg. (15,000).) Metlock, Inc. Statement of Cash Flows-Indirect Approach $ Adjustments to reconcile net income to $ $

Answer 1

To calculate net cash provided by operating activities using the indirect approach, start with net income and make adjustments for non-cash expenses and changes in working capital.

Step-by-step explanation:

To calculate net cash provided by operating activities using the indirect approach, we start with net income and make adjustments for non-cash expenses and changes in working capital.

First, we add back depreciation ($128,000) to net income. Then, we subtract the decrease in accounts receivable (-$280,000) and the decrease in accounts payable (-$224,000).

So, the calculation is: Net cash provided by operating activities = Net income + Depreciation - Decrease in accounts receivable - Decrease in accounts payable = $0.80 million + $128,000 - $280,000 - $224,000 = $0.80 million - $376,000 = $424,000.

Answer 2

Net cash provided by operating activities for Metlock, Inc. is calculated using the indirect approach by starting with net income and adjusting for non-cash expenses and changes in working capital, resulting in $0.984 million.

Step-by-step explanation:

To compute net cash provided by operating activities using the indirect approach for Metlock, Inc., we start with the net income of $0.80 million and adjust for changes in working capital and non-cash expenses.

• Start with net income: $0.80 million
• Add back depreciation (non-cash expense): $128,000
• Add the decrease in accounts receivable (an increase in cash): $280,000
• Subtract the decrease in accounts payable (a decrease in cash): ($224,000)

The computations are as follows:

Net income: $0.80 million

+ Depreciation: $128,000

+ Decrease in accounts receivable: $280,000

- Decrease in accounts payable: ($224,000)

= Net cash provided by operating activities: $0.984 million