Dance Unlimited Company reported net income of $80,000 for the year. During the year, accounts receivable decreased by $3,000, accounts payable increased by $4,500 and depreciation expense of $9,000 was recorded and there was a gain on the sale of long-term investments of $2,000. Using the indirect method, net cash flows from operating activities for the year are
A) $94,500.
B) $88,500.
C) $79,500.
D) $89,500.

Question

Quizplus · Accepted Answer

Net income + Depreciation expense + Gain on sale of long-term investments - Decrease in accounts receivable + Increase in accounts payable = Net cash flows from operating activities$80,000 + $9,000 + $2,000 - $3,000 + $4,500 = $94,500

Dance Unlimited Company Reported Net Income of $80,000 for the Year