Asked by zereniah mungate on Jun 04, 2024

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The data given below are from the accounting records of the Kuhn Corporation: The data given below are from the accounting records of the Kuhn Corporation:   Based on this information, the net cash provided by (used in) operating activities using the indirect method would be: A) $55,000 B) $58,000 C) $50,000 D) $60,000 Based on this information, the net cash provided by (used in) operating activities using the indirect method would be:

A) $55,000
B) $58,000
C) $50,000
D) $60,000

Indirect Method

A technique used in cash flow statements where net income is adjusted for changes in balance sheet accounts to calculate cash flow from operating activities.

Operating Activities

Actions related to the day-to-day functions of a business that directly affect its cash inflows and outflows, such as sales, purchase of inventory, and payment of salaries.

  • Estimate the net cash proceeds from (or outlays for) operating activities.
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JW
Jeremy WatsonJun 08, 2024
Final Answer :
C
Explanation :
To calculate the net cash provided by operating activities using the indirect method, we need to start with net income and then make adjustments for non-cash items and changes in working capital accounts.

Starting with net income of $80,000, we need to add back depreciation expense of $20,000 (a non-cash expense) and subtract the increase in accounts receivable of $5,000 and the increase in accounts payable of $45,000 (changes in working capital accounts).

Net cash provided by operating activities = Net income + Depreciation expense - Increase in accounts receivable - Increase in accounts payable

= $80,000 + $20,000 - $5,000 - $45,000
= $50,000

Therefore, the correct answer is C) $50,000.
Explanation :