Majorn Auto Parts Store had net income of $81,000 for the year just ended. Majorn collected the following additional information to prepare its statement of cash flows for the year: Majorn uses the indirect method to prepare its statement of cash flows. What is Majorn's net cash provided (used) by operating activities?
A)$41,000
B)$(53,000)
C)$185,000
D)$279,000

Question

Majorn Auto Parts Store had net income of $81,000 for the year just ended. Majorn collected the following additional information to prepare its statement of cash flows for the year:  Majorn uses the indirect method to prepare its statement of cash flows. What is Majorn's net cash provided (used) by operating activities?
A)$41,000 
B)$(53,000) 
C)$185,000 
D)$279,000

Quizplus · Accepted Answer

To calculate the net cash provided (used) by operating activities, we start with net income and make adjustments for non-cash items and changes in current assets and liabilities.

Starting with net income of $81,000, we would make the following adjustments:

- Add back depreciation of $60,000
- Subtract increase in accounts receivable of $22,000
- Add back decrease in inventory of $35,000
- Subtract increase in accounts payable of $137,000

Net cash provided (used) by operating activities = $81,000 + $60,000 - $22,000 + $35,000 - $137,000 = -$53,000

Therefore, the correct answer is B.

Majorn Auto Parts Store Had Net Income of $81,000 for the Year