Answer:
$240,000
Explanation:
Let the net income be Y
Accounts payable decreased $21,000 - This will be subtracted from the net profit as a reduction in liability
Prepaid assets increased $15,000 - This will be subtracted from the net profit as an increase in assets
Depreciation expense was $27,000 - This will be added back to net profit as a non cash item
Accounts receivable decreased $21,000 - This will be add from the net profit as a reduction in assets
Loss on sale of a depreciable asset was $16,000 - This will be added back to net profit as a non cash item
Wages payable increased $10,000 - This will be added from the net profit as an increase in liability
Unearned revenue decreased $16,000 - This will be subtracted from the net profit as a reduction in liability
Patent amortization expense was $10,000 - This will be added back to net profit as a non cash item
As such
Y - 21000 - 15000 + 27000 + 21000 + 16000 +10000 - 16000 + 10000 = 272000
Y = 272000 + 21000 + 15000 - 27000 - 21000 - 16000 - 10000 + 16000 - 10000
Y = $240,000
The amount of DJ's net income is $240,000.
Cash flow from operating activities, $272,000
Add Accounts payable decreased $21,000
Add Prepaid assets increased $15,000
Less Depreciation expense ($27,000)
Less Accounts receivable decreased ($21,000)
Less Loss on sale of a depreciable asset ($16,000 )
Less Wages payable increased ($10,000)
Add Unearned revenue decreased $16,000
Less Patent amortization expense ($10,000)
Net income $240,000
Inconclusion DJ's net income is $240,000.
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