Sears Inc.'s Net Income was $56,000. Other accounts that changed included: Accounts Receivable decreased by $25,000; Merchandise Inventory increased by $15,000; Accounts Payable increased by $4,400; and Salaries Payable increased by $6,200. The amount of Net Cash Flow from Operating Activities using the indirect method is:
A) $76,600.
B) $81,000.
C) $50,600.
D) $26,600.

Question

Quizplus · Accepted Answer

The net cash flow from operating activities using the indirect method starts with the net income ($56,000) and adjusts for changes in working capital. Decreases in accounts receivable ($25,000) add to cash, while increases in inventory ($15,000) reduce cash. Increases in accounts payable ($4,400) and salaries payable ($6,200) add to cash. Therefore, the calculation is $56,000 + $25,000 - $15,000 + $4,400 + $6,200 = $76,600.

Sears Inc'S Net Income Was $56,000