Fox, inc. reported net income of $300,000 for the current. changes occurred in several balance sheet
accounts as follows:

equipment $25,000 increase

accumulated depreciation 40,000 increase

note payable 30,000 increase

additional current year information:

• during the year, fox sold equipment costing $25,000, with accumulated depreciation of $12,000, for a gain of $5,000.

• in december, fox purchased equipment costing $50,000 with $20,000 cash and a 12% note payable of $30,000.

• depreciation expense for the year was $52,000.

in fox's statement of cash flows for the year, net cash provided by operating activities should be:

$347,000

Explanation:

Cash flow, operating activities:

Net income                                                              $300,000

Depreciation expense                                                 52,000

Gain on sale of equipment                                          (5,000)    

Cash provided by operations                                 $347,000

Depreciation expense ($52,000) does not indicate any cash being paid, hence it must be added to Net Income.

The $5,000 must be subtracted from Net Income in the Operating Section, because the $18,000 ($25,000-$12,000+$5,000) contains the $5,000 of cash received, and it should be shown increasing the Net Income only in the Investing Section.

Hope this helps!

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answer; sales of books;