Textbook Problem

Which item is added to net income when computing cash flows from operating activities?

a. Gain on the disposal of property, plant, and equipment

b. Increase in wages payable

c. Increase in inventory

d. Increase in prepaid rent

Use the following information for Multiple-Choice Questions 11-9 and 11-10:

Cornett Company reported the following information: cash received from the issuance of common stock, $150,000; cash received from the sale of equipment, $14,800; cash paid to purchase an investment, $20,000; cash paid to retire a note payable, $50,000; and cash collected from sales to customers, $225,000.