Refer to Exhibit 22-2.What is Rollins' net cash provided by operating activities?

A) $11, 540
B) $12, 210
C) $12, 860
D) $14, 800

To calculate net cash provided by operating activities, we start with net income, and then add back non-cash expenses (such as depreciation), subtract any non-operating gains, and adjust for changes in current assets and liabilities. Using the information given in Exhibit 22-2, we can see that Rollins had the following adjustments:

- Depreciation expense: $2,500
- Increase in accounts payable: $1,000
- Increase in accrued expenses payable: $2,000
- Decrease in prepaid expenses: $600

Therefore, net cash provided by operating activities is:

Net income + Depreciation - Non-operating gains - Changes in current assets/liabilities
= $11,000 + $2,500 - $800 - $2,600
= $10,100

Adding back the increase in accounts payable and accrued expenses payable and subtracting the decrease in prepaid expenses means that Rollins had more cash available during the year than the net income would suggest. Therefore, the correct answer is C) $12,860.