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Zook Incorporated, had net income for 2018 of $5,400,000. Additional information is as follows:
Amortization of patents
$ 45,000
Depreciation on plant assets 1,650,000
Long-term debt:
Bond premium amortization 65,000
Interest paid 900,000
Provision for doubtful accounts:
Current receivables 80,000
Long-term nontrade receivables 30,000
What should be the net cash provided by operating activities in the statement of cash flows for the year ended December 31, 2018, based solely on the above information?
a. $7,220,000.
b. $7,270,000.
c. $7,140,000.
d. $7,240,000.

Respuesta :

TomShelby

Answer:

b. $7,270,000.

Explanation:

net income                   5,400,000

patent amort                      45,000

depreciation                  1,650,000

premium on bonds            65,000

bad debt expense            110,000  

total                                7,270,000

We should remove the non.monetary terms

the patent , depreication and allwance for doubful account do not represent cash erogation so they most be removed.

Same is true for the premium on bonds which makes for a lower interest expense than the amount of interest paid so it should also be taking into consideration as an element to remove.

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