Final answer:
The net cash provided by operating activities, based on the provided information, is $21,500. Non-operating activities such as the purchase of office equipment are not included in this calculation.
The correct answer is therefore option c. $21,500.
Step-by-step explanation:
The student's question is related to calculating the net cash provided by operating activities. This calculation is part of the cash flow statement, which is a key financial statement used in accounting. To calculate the net cash provided by operating activities, we start with the Net income and adjust for changes in working capital and non-cash expenses:
- Start with net income: $20,000
- Add back non-cash expense (Depreciation): $3,000
- Subtract increase in accounts receivable: $1,000
- Subtract increase in prepaid rent: $400
- Add increase in accrued liabilities: Since this figure is not provided in the question, we assume it is 0 or unchanged
- Subtract cash paid to purchase office equipment: This is not an operating activity and should not be adjusted in the operating activities calculation
Therefore, the net cash provided by operating activities is calculated as follows:
$20,000 + $3,000 - $1,000 - $400 = $21,500.