Chino Company reported net income of $20,000 for the current year.During the year,Inventory decreased by $7,000,Accounts Payable decreased by $8,000,Depreciation Expense was $10,000,and Accounts Receivable increased by $6,500.If the indirect method is used,what is the net cash provided by operating activities?
A) $10,500
B) $22,500
C) $38,500
D) $51,500

Question

Quizplus · Accepted Answer

To calculate Net Cash Provided by Operating Activities under the indirect method, we need to adjust the net income for non-cash expenses and changes in working capital.
Adjustments:
Depreciation Expense: +10,000
Decrease in Inventory: +7,000
Decrease in Accounts Payable: -8,000
Increase in Accounts Receivable: -6,500
Net Cash Provided by Operating Activities = 20,000 + 10,000 + 7,000 - 8,000 - 6,500 = $22,500. 
Therefore, the best choice is B.

Chino Company Reported Net Income of $20,000 for the Current