The balance sheets of Butler, Inc. and its 70 percent-owned subsidiary, Cassie Corp., are presented below:

Additional information for 2011:

Net cash flow from operating activities was:

A) $92,000.
B) $27,000.
C) $63,000.
D) $29,000.
E) $34,000.

Question

The balance sheets of Butler, Inc. and its 70 percent-owned subsidiary, Cassie Corp., are presented below:
 
Additional information for 2011:

Net cash flow from operating activities was:

A) $92,000. 
B) $27,000. 
C) $63,000. 
D) $29,000. 
E) $34,000.

Quizplus · Accepted Answer

To calculate the net cash flow from operating activities, we need to use the indirect method and adjust the net income for non-cash items such as depreciation and changes in current asset and liability accounts. Using the numbers provided in the question and the formula for calculating net cash flow from operations, we get:
Net cash flow from operating activities = Net income + Depreciation expense - Increase in accounts receivable - Increase in inventory + Increase in accounts payable
= $40,000 + $24,000 - ($12,000 - $8,000) - ($14,000 - $12,000) + ($6,000 - $2,000)
= $63,000
Therefore, the correct answer is C ($63,000).

The Balance Sheets of Butler, Inc