Question

Krenshaw Company reported total sales revenue of $80,000, total expenses of $72,000, and net income of $8,000 for the year ended December 31, 2009. During 2009, accounts receivable increased by $3,000, merchandise inventory decreased by $2,000, accounts payable increased by $1,000, and $5,000 in depreciation expense was recorded. Assuming no other adjustments to net income are needed, the net cash inflow from operating activities using the indirect method was:

Answer 1

Answer: $13000

Explanation:

Following the information provided in the question, the net cash inflow from operating activities using the indirect method will be calculated as follows:

Net Income = $8,000

Add: Depreciation expense = $5,000

Add: Decrease in inventory = $2,000

Add: Increase in account payable = $1,000

Less: Increase in account receivable (3,000)

Cash inflow from operating activities = $13000