Use the following information and the indirect method to calculate the net cash provided or used by operating activities:Net income $12,800Depreciation expense $11,600Payment on mortgage payable $14,400Gain on sale of land $7,900Increase in merchandise inventory $2,100Increase in accounts payable $6,500Proceeds from sale of land $8,500A. $35,300B. $12,400.C. $20,900.D. $7,900.E. $40,900.

Answer :

The net cash provided or used by operating activities is $20,900 (C).

The calculation is shown below:

Net income plus depreciation costs, gain from the sale of land, an increase in inventory of goods, and an increase in accounts payable equals net cash produced by operational activities.

Net cash from operating activities equals $12,800 plus $11,600 minus 7,900 minus 2,100 plus $6,500.

Net cash used for operating purposes is $20,900.

Operating activities are all the things a company does to bring its products and services to market on an ongoing basis. Non-operating activities are one-time events that may affect revenues, expenses or cash flow but fall outside of the company's routine, core business.

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