Use the following information for Chambers Corporation to answer the following questions:
Calculate the net cash from operating activities for Chambers Corporation for the year 20x2?

A)Negative $260,000
B)$1,170,000
C)$565,000
D)$85,000

Question

Use the following information for Chambers Corporation to answer the following questions: ​ 
​ Calculate the net cash from operating activities for Chambers Corporation for the year 20x2?
​
A)​Negative $260,000 
B)​$1,170,000 
C)​$565,000 
D)​$85,000

Quizplus · Accepted Answer

To calculate net cash from operating activities, we need to use the indirect method and adjust net income for non-cash items and changes in working capital.

Starting with net income of $600,000, we add back depreciation expense of $300,000 (which is a non-cash expense) and subtract the increase in accounts receivable of $150,000 and the increase in inventory of $245,000 (as these are uses of cash). We also add the increase in accounts payable of $60,000 (as this is a source of cash).

This gives us: 
Net income: $600,000 
Add: 
Depreciation expense: $300,000 
Subtract: 
Increase in accounts receivable: ($150,000) 
Increase in inventory: ($245,000) 
Add: 
Increase in accounts payable: $60,000

Net cash from operating activities: $565,000

Therefore, the correct answer is C.

Use the Following Information for Chambers Corporation to Answer the Following