The most recent statement of financial position and income statement of Dallavalle Corporation appear below: Cash dividends were $12.The company did not retire or sell any property,plant,and equipment during the year.The net cash provided by (used in)operating activities for the year was:

A)$77
B)$68
C)$40
D)$14

Question

The most recent statement of financial position and income statement of Dallavalle Corporation appear below: Cash dividends were $12.The company did not retire or sell any property,plant,and equipment during the year.The net cash provided by (used in) operating activities for the year was:

A)$77 
B)$68 
C)$40 
D)$14

Quizplus · Accepted Answer

To calculate the net cash provided by operating activities, we need to use the indirect method. 
Starting with net income: 
Net income = $45 
Adjustments for non-cash items: 
Depreciation expense = $14 
Increase in accounts payable = $16 
Decrease in accounts receivable = ($4) 
Increase in inventory = ($5) 
Net cash provided by operating activities = Net income + Depreciation expense - Increase in accounts payable - Decrease in accounts receivable + Increase in inventory 
Net cash provided by operating activities = $45 + $14 - $16 - ($4) + ($5) = $44 
Since cash dividends were $12, the net cash provided by operating activities after deducting the cash dividends is: 
Net cash provided by operating activities - Cash dividends = $44 - $12 = $32 
Therefore, the correct answer is B) $68.

The Most Recent Statement of Financial Position and Income Statement