Question

In preparing a company's statement of cash flows for the most recent year using the indirect method, the following information is available:
Net income for the year was $52,000
Accounts payable increased by 18,000
Accounts receivable decreased by 25,000
Inventories decreased by 5,000
Cash dividends paid were 14,000
Depreciation expense was 20,000

Net cash provided by operating activities was:
(A) $120,000.
(B) $71,000.
(C) $70,000.
(D) $24,000.
(E) $110,000.

Answer 1

Answer:

(A) $120,000.

Explanation:

CASH FLOWS FROM OPERATING ACTIVITIES  $

Net Income     52,000

Adjustments to reconcile net income to      

net cash provided by operating activities:      

Depreciation on Fixed Assets    20,000  

(Increase) Decrease in Current Assets:      

Accounts Receivables    25,000

Inventory      5,000

Increase (Decrease) in Current Liabilities:    

Accounts Payable     18,000

NET CASH PROVIDED BY OPERATING ACTIVITIES 120,000