Michael's Industries reported net income of $10,000 and paid cash dividends of $2,000.Changes in balance sheet accounts for the year were as follows: Based on the above information,what is the amount of net cash provided by operations?
A)$1,000
B)$14,000
C)$19,000
D)$30,000

Question

Michael's Industries reported net income of $10,000 and paid cash dividends of $2,000.Changes in balance sheet accounts for the year were as follows:  Based on the above information,what is the amount of net cash provided by operations?
A)$1,000 
B)$14,000 
C)$19,000 
D)$30,000

Quizplus · Accepted Answer

To calculate the net cash provided by operations, we need to use the indirect method of the cash flow statement. The net income is adjusted for non-cash expenses and changes in current assets and liabilities.

Starting with net income of $10,000:

Add depreciation expense: $16,000 
Subtract increase in accounts receivable: ($4,000) 
Subtract increase in inventory: ($6,000) 
Add decrease in accounts payable: $3,000 
Add decrease in accrued liabilities: $200

Net cash provided by operations = $10,000 + $16,000 - $4,000 - $6,000 + $3,000 + $200 = $19,200

Therefore, the correct option is C.

Michael's Industries Reported Net Income of $10,000 and Paid Cash