Use the following information and the indirect method to calculate the net cash provided or used by operating activities:
$$\begin{array} { | l | r | }
\hline \text { Net income } & \$ 12,300 \
\hline \text { Depreciation expense } & 12,000 \
\hline \text { Payment on mortgage payable } & 15,000 \
\hline \text { Gain on sale of land } & 7,500 \
\hline \text { Increase in merchardise inventory } & 2,050 \
\hline \text { Increase in accounts payable } &6 , 1 5 0 \
\hline \text { Proceeds from sale of land } & 8 , 0 0 0 \
\hline
\end{array}$$
A) $12,700
B) $13,900
C) $20,900
D) $28,400
E) $35,900

Question

Use the following information and the indirect method to calculate the net cash provided or used by operating activities:
$$\begin{array} { | l | r | } 
\hline \text { Net income } & \$ 12,300 \
\hline \text { Depreciation expense } & 12,000 \
\hline \text { Payment on mortgage payable } & 15,000 \
\hline \text { Gain on sale of land } & 7,500 \
\hline \text { Increase in merchardise inventory } & 2,050 \
\hline \text { Increase in accounts payable } &6 , 1 5 0 \
\hline \text { Proceeds from sale of land } &  8 , 0 0 0  \
\hline
\end{array}$$
A) $12,700
B) $13,900
C) $20,900
D) $28,400
E) $35,900

Quizplus · Accepted Answer

Net cash provided by operating activities is calculated as: Net income ($12,300) + Depreciation expense ($12,000) - Gain on sale of land ($7,500) - Increase in merchandise inventory ($2,050) + Increase in accounts payable ($6,150) = $20,900.

Use the Following Information and the Indirect Method to Calculate