Peterson Enterprises reports the following information: Net income $5,000,000 Depreciation expense 680,000 Loss on the sale of investments 154,000 Increase in accounts receivable 320,000 Peterson should report cash provided by operating activities of:.a. $5,000,000.b. $3,846,000. c. $5,514,000.d. $6,154,000.

The answer is Option C.

Explanation:

The cash flows statement (extract) is provided below:

Peterson Enterprises

Statement of cash flows

Net income                                                         $5,000,000

Add: Depreciation expense                                    680,000

        Loss on the sale of investments                     154,000

Less: Increase in accounts receivable                  (320,000)

Net cash flows from operating activities         $5,514,000

The depreciation expense and loss on sale of investments are non-cash items, hence the need to add them back to the net income.The increase in accounts receivable signifies an outflow of cash, hence the need to back it out from the net income.

Noel

Explanation:

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