Cinno Company reported net income of $20,000 for the year ended December 31,2007.During the year,inventories decreased by $7,000,accounts payable decreased by $8,000,amortization expense was $10,000,and accounts receivable increased by $6,500.Net cash provided by operations in 2007,computed using the indirect method,was:

Question

Quizplus · Accepted Answer

The net cash provided by operations is calculated using the indirect method in the following way:

Net income: $20,000
Add: Amortization expense: $10,000
Increase in accounts receivable: $6,500
Decrease in inventories: $7,000
Decrease in accounts payable: $8,000
Net cash provided by operations: $36,500

Therefore, the correct answer is B) $22,500.

Cinno Company Reported Net Income of $20,000 for the Year