Freeman Company's accounting records include the following information: What is the amount of net cash provided by operating activities indicated by these transactions?
A)$40,000.
B)$45,000.
C)$55,000.
D)$60,000.

Question

Freeman Company's accounting records include the following information:  What is the amount of net cash provided by operating activities indicated by these transactions?
A)$40,000. 
B)$45,000. 
C)$55,000. 
D)$60,000.

Quizplus · Accepted Answer

We need to calculate the net cash provided by operating activities, which we can derive from the changes in the company's current assets and liabilities. 
Starting with the beginning balances and adding/subtracting the changes in each account, we get:

Beginning cash balance: $10,000 
+ Increase in accounts receivable: $5,000 
- Decrease in inventory: ($10,000) 
+ Increase in accounts payable: $10,000 
+ Depreciation expense: $20,000 
- Gain on sale of equipment: ($5,000)

Net cash provided by operating activities = $10,000 + $5,000 - $10,000 + $10,000 + $20,000 - $5,000 = $30,000

Therefore, the correct answer is (C) $55,000.

Freeman Company's Accounting Records Include the Following Information: What