Question

Land was acquired for $200,000 in exchange for common stock, par $200,000, during the year; all equipment purchased was for cash. Equipment costing $20,000 was sold for $8,000; book value of the equipment was$16,000 and the loss was reported as an ordinary item in net income. Cash dividends of $40,000 were charged to retained earnings and paid during the year; the transfer of net income to retained earnings was the only other entry in the Retained Earnings account. In the statement of cash flows for the year ended December 31,2015, for Naley Company:1. The net cash provided by operating activities wasA) $104,000.B) $132,000.C) $112,000.D) $96,000.

Answer 1

Answer:

Option (c) is correct.

Explanation:

Net cash provided by operating activities:

= Net income + Depreciation + loss on sale of Equipment + Decrease in prepaid expense + Increase in account payable - Increase in account receivable - increase in inventory - Decrease in accrued expenses

= $132,000 + 44,000 + 8,000 + 60,000 + 52,000 - 60,000 - 100,000 - 24,000

= $112,000

Note:

The balance sheet is missing in this question, so I attached the balance sheet with the answer.