Team Shirts,Inc.collected $20,000 from customers,recorded depreciation expense of $5,000,received interest of $100,paid $15,000 of its operating expenses,and paid $500 in dividends.The amount of net cash from (or used)for OPERATING activities is ________.
A)$10,100
B)$100
C)$5,100
D)$9,600

Question

Team Shirts,Inc.collected $20,000 from customers,recorded depreciation expense of $5,000,received interest of $100,paid $15,000 of its operating expenses,and paid $500 in dividends.The amount of net cash from (or used)for OPERATING  activities is ________.
A)$10,100
B)$100
C)$5,100
D)$9,600

Quizplus · Accepted Answer

To calculate the net cash from operating activities, we start with the company's net income and make adjustments for non-cash items like depreciation and changes in current assets and liabilities. In this case, we are not given the company's net income, but we can make adjustments to the cash collected from customers, interest received, and operating expenses paid to arrive at the net cash from operating activities.

Starting with the $20,000 collected from customers, we subtract the $15,000 of operating expenses paid to get $5,000. To this, we add back the $5,000 in depreciation expense and the $100 of interest received to get a total of $10,100. Since the company did not report any changes in its current assets and liabilities, this is the net cash from operating activities. Therefore, the best choice is (C) $5,100.