Scranton,Inc.reports net income of $230,000 for the year ended December 31.It also reports $87,700 depreciation expense and a $5,000 gain on the sale of equipment.Its comparative balance sheet reveals a $35,500 decrease in accounts receivable,a $15,750 increase in accounts payable,and a $12,500 decrease in wages payable.Calculate the cash provided (used)in operating activities using the indirect method.
A)$376,450.
B)$351,450.
C)$356,450.
D)$319,950.
E)$263,750.

Question

Quizplus · Accepted Answer

The calculation of cash flows from operating activities using the indirect method is as follows:

Net income $230,000 
Adjustments for: 
Depreciation expense 87,700 
Gain on sale of equipment (5,000) 
Increase in accounts payable 15,750 
Decrease in accounts receivable (35,500) 
Decrease in wages payable (12,500) 
Net cash provided by operating activities $281,450

Therefore, the answer is B, $351,450 because the net cash provided by operating activities is $281,450.