At the end of the first year of operations,Meacham's balance sheet showed the following account balances: Accounts Receivable,$13,400;Inventory,$9,400;and Accounts Payable,$14,650.The company's income statement reports net income of $37,400,including depreciation expense of $10,400.Using only the given information,compute Meacham's net cash flow from operating activities using the indirect method.
A)$65,250
B)$39,650
C)$24,350
D)$26,650

Question

Quizplus · Accepted Answer

To calculate net cash flow from operating activities using the indirect method, start with net income ($37,400) and adjust for non-cash expenses like depreciation ($10,400). Then, adjust for changes in working capital: decrease in Accounts Receivable ($13,400) and increase in Accounts Payable ($14,650). The calculation is: $37,400 + $10,400 - $13,400 + $14,650 = $39,650.

At the End of the First Year of Operations,Meacham's Balance