The accounting records of Miller Company provided the data below ($ in 000s). $\begin{array}{lr}
\text { Net income }&\$17,500\
\text { Depreciation expense } & 8,400 \
\text { Increase in accounts receivable } & 4,400 \
\text { Decrease in inventory } & 6,400 \
\text { Decrease in prepaid insurance } & 1,500 \
\text { Decrease in salaries payable } & 2,700 \
\text { Increase in interest payable } & 900
\end{array}$ What is the net cash provided (used)by operating activities?
A)$20,600
B)$27,600
C)$3,800
D)($27,600)
E)$41,800

Question

Quizplus · Accepted Answer

The net cash provided by operating activities is calculated by adjusting net income for changes in working capital and non-cash expenses. Starting with net income of $17,500, add back depreciation ($8,400), adjust for changes in working capital: subtract increase in accounts receivable ($4,400), add decrease in inventory ($6,400), add decrease in prepaid insurance ($1,500), subtract decrease in salaries payable ($2,700), and add increase in interest payable ($900). The total is $27,600.

The Accounting Records of Miller Company Provided the Data Below