# Kingbird Beverage Company reported the following items in the most recent year. Net income...

## Question:

Kingbird Beverage Company reported the following items in the most recent year.

Net income $40,300 Dividends paid 6,520 Increase in accounts receivable 10,330 Increase in accounts payable 7,270 Purchase of equipment (capital expenditure) 8,360 Depreciation expense 4,270 Issue of notes payable 23,200 Compute net cash provided by operating activities, the net change in cash during the year. ## Cash Flow from Operating Activities The cash flow from the operating activities is the flow of cash which occurs from the operation of the business and not due to the investing and the financing activities. The operating activities basically include sales, purchase, routine expenses, taxes, etc. All the non-cash operating expenses like depreciation are ignored in the computation of the operating cash flow. However, the tax shield on depreciation is considered because it decreases the net tax payment. ## Answer and Explanation: The net cash provided by operating activities is$45,510

The net change in cash during the year is $49,830 Explanation Step 1 Computation of net cash provided by operating activities  Amount Net Income$40,300 Less:Increase in accounts receivable 10,330 Add: Increase in accounts payable 7,270 Add: Depreciation expense 4,270 Net cash provided by operating activities $41,510 Step 2 Computation of net cash used by investing activities  Amount Purchase of equipment (capital expenditure) ($8,360) Net cash used by investing activities ($8,360) Step 3 Computation of net cash provided by financing activities  Amount Issue of notes payable$23,200 Less: Dividends paid 6,520 Net cash provided by financing activities $16,680 Step 4 Computation of net change in cash during the year  Amount Net cash provided by operating activities$41,510 Net cash used by investing activities ($8,360) Net cash provided by financing activities$16,680 Net change in cash during the year \$49,830