Question

Use the following information and the indirect method to calculate the net cash provided or used by operating activities:

Net income $85,800
Depreciation expense 12,500
Gain on sale of land 8,000
Increase in merchandise inventory 2,550
Increase in accounts payable 6,650

a. $37,400.
b. $13,150.
c. $94,400.
d. $14,150.
e. $29,400.

Answer 1

c. $94,400

Step-by-step explanation:

Net cash provided or used by operating activities is computed as see below;

Net cash provided or used by operating activities = Net income + Depreciation expense - Gain on sale of land - Increase in merchandise inventory + Increase in accounts payable

Net cash provided or used by operating activities = $85,800 + $12,500 - $8,000 - $2,550 + $6,650

Net cash provided or used by operating activities = $94,400