Use the following information and the indirect method to calculate the net cash provided or used by operating activities:
A)$69,900.
B)$108,900.
C)$93,900.
D)$85,700.
E)$81,600.

Question

Use the following information and the indirect method to calculate the net cash provided or used by operating activities: 
A)$69,900. 
B)$108,900. 
C)$93,900. 
D)$85,700. 
E)$81,600.

Quizplus · Accepted Answer

The net loss reported in the income statement is $70,000. To adjust this amount to the net cash provided/used by operating activities, we need to add back non-cash expenses such as depreciation and amortization expense ($25,000) and subtract the increase in accounts receivable ($2,000), add the increase in accounts payable ($20,000), and subtract the increase in inventory ($15,100). Therefore:

Net cash provided/used by operating activities = Net loss + Non-cash expenses - Increase in accounts receivable + Increase in accounts payable - Increase in inventory
= $70,000 + $25,000 - $2,000 + $20,000 - $15,100
= $93,900

Therefore, the correct answer is C) $93,900.

Use the Following Information and the Indirect Method to Calculate